The rupee dropped 32 paise to a historic low of 89.85 against the US dollar on Tuesday, pressured by strong dollar demand, foreign fund outflows and elevated crude prices
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The rupee depreciated 32 paise to an all-time low of 89.85 against the US dollar in early trade on Tuesday, weighed down by the broad strength of the American currency in overseas markets and persistent foreign fund outflows.
Forex traders said strong dollar demand from corporates, importers and foreign portfolio investors pressurised the rupee. Moreover, elevated crude oil prices further dented investor sentiments.
At the interbank foreign exchange, the rupee opened at 89.70 against the US dollar before dropping to record low level of 89.85 , down 32 paise from its previous close.
On Monday, the rupee after sinking to 89.79 in intraday trade, settled at 89.53 against the US dollar.
"The RBI has been selling dollars in the market, but it has also bought dollars when Indian Rupee rose thus keeping the demand intact," said Anil Kumar Bhansali, Head of Treasury and Executive Director Finrex Treasury Advisors LLP.
Bhansali further noted that, the fundamentals of the Indian economy like a high GDP growth of 8.2 per cent have been overweighed by the dollar demand.
"The uncertainties surrounding the India-US trade deal have not helped the matters and have actually aggravated the dollar buying syndrome," Bhansali said.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading at 99.41.
Brent crude, the global oil benchmark, was trading lower by 0.03 cent at USD 63.15 per barrel in futures trade.
On the domestic equity market front, the benchmark sensitive index Sensex declined 223.84 points or 0.26 per cent at 85,418.06, while the Nifty was trading lower by 59 points or 0.23 per cent at 26,116.75.
Foreign Institutional Investors sold equities worth Rs 1,171.31 crore on Monday, according to exchange data.
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