Rupee recovers from all-time low of 86.64 to settle eight paise higher against the US dollar | Stock Market News

Some recovery in domestic equity markets after the release of macroeconomic numbers also supported the Indian currency even though it remained under pressure due to elevated crude oil prices and continuous outflow of foreign funds.

At the interbank foreign exchange, the rupee opened at 86.57 and touched the intra-day high of 86.45 before closing for the day at 86.62 (provisional) against the greenback, registering a gain of 8 paise from its previous close.

On Monday, the rupee logged its steepest single-day fall in nearly two years and ended the session 66 paise down at its historic low of 86.70 against the US dollar. The currency’s previous record one-day fall of 68 paise was witnessed on February 6, 2023.

The local unit has plunged more thanThe Indian rupee weakened to its all-time low on Tuesday, January 14, due to strong dollar bids spurred by the maturity of positions in the non-deliverable forwards (NDF) market, while likely intervention by the Reserve Bank of India (RBI) helped cap losses.

The Indian rupee hit a record low of 86.6475 before closing at 86.63 against the US dollar, down from its close at 86.5750 in the previous session. The currency was under pressure through much of the session amid broad-based dollar demand prompted by maturing positions in the NDF market.

State-run banks were spotted offering dollars, most likely on behalf of the RBI, while foreign banks’ dollar offers also helped limit the rupee’s decline.

The domestic currency logged its steepest single-day fall in nearly two years on Monday as the dollar scaled an over two-year high on fading bets of US Federal Reserve interest rate cuts.

The rupee’s one-month implied volatility, a gauge of future expectations, rose to a 16-month peak of four per cent on the day.

According to news agency Reuter, the central bank intends to be judicious in its use of foreign exchange reserves to mitigate domestic currency market volatility amid strong global headwinds.

The dollar index was last quoted at 109.5, having cooled off its two-year peak, which helped most Asian currencies nudge higher.

Jateen Trivedi, VP Research Analyst – Commodity and Currency, LKP Securities said, “The rupee traded at 86.60, witnessing volatility as the US dollar held steady around 109.504, while crude prices fluctuated in the $77.50–77 range. Positive buying in the capital markets, particularly in PSU stocks, coupled with DII inflows over the past two days, provided minor support to the rupee.”

“With budget expectations building up, these factors could lend further strength. The trading range for the rupee is projected between 86.25 and 86.85, with participants focusing on domestic developments and global cues for direction,” added Trivedi.

Investors now await the release of US wholesale and consumer price inflation data due on Tuesday and Wednesday, respectively.