Rupee dives deeper amid global turmoil; ends 42 paise down at 86.68 against dollar

Mumbai, Apr 9 (PTI) The rupee extended its losing streak for the fourth straight session and settled 42 paise lower at 86.68 against the US dollar on Wednesday, amid escalating tariff turbulence globally even as the Reserve Bank reduced key interest rate by 25 basis points as a growth-stimulus measure.

Even though crude oil prices fell sharply to a record low level and the American currency remained weak, the Indian currency stayed under pressure due to incessant outflow of foreign funds and lacklustre sentiment in the domestic equity markets, forex traders said.

At the interbank foreign exchange, the rupee opened at 86.52 and moved between a high of 86.47 and the low of 86.76 against the greenback during intraday, facing extreme volatility. The unit settled at 86.68 against the dollar, sharply lower by 42 paise from the previous closing level.

On Tuesday, the Indian currency crashed 50 paise to settle at 86.26 against the dollar. This was the steepest single-day decline for the rupee since January 13, when it lost 66 paise.

In the preceding two sessions on Monday and Friday, the rupee had lost 32 paise and 14 paise, respectively.

In the last four trading sessions the rupee has lost 104 paise against the US dollar.

"The Indian rupee has emerged as the worst-performing currency among its Asian counterparts, primarily due to foreign fund outflows. This underperformance is attributed to a diminished risk appetite, despite the central bank's dovish policy stance," said Dilip Parmar – Senior Research Analyst, HDFC Securities.

In the near-term, the spot USDINR is expected to approach the descending trend line resistance at 86.90, with support likely to be found at 86.40.

According to Anuj Choudhary, Research Analyst at Mirae Asset Sharekhan, the rupee declined amid dented global market sentiments owing to trade war between the US and China, after US President Donald Trump imposed an additional 50 per cent tariff on China.

"Weak domestic markets and FII outflows also pressurised the rupee. However, weakness in crude oil prices and a decline in the US dollar index cushioned the downside. RBI cut repo rate by 25 bps to 6 per cent, in line with expectations," he said.

Meanwhile, RBI's monetary policy committee on Wednesday decided to slash the key interest rate by 25 basis points, reducing it for the second time in a row, paving the way to cut financing cost and stimulate economic activities.

At the same time, citing global uncertainties over tariff moves the central bank lowered the country's growth projection for FY26 at 6.5 per cent, from 6.7 per cent estimated earlier.

About RBI's currency management strategy during a press conference after the latest bi-monthly monetary policy announcement, RBI Governor Sanjay Malhotra said the central bank does not target any level.

"So far as currency management is concerned we do not actually intervene in the currency management. It's only... for excessive or disruptive volatility that we do. So we do not try to manage or target any reach or band or level of the Indian rupee," Malhotra said.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.68 per cent lower at 102.25.

Brent crude, the global oil benchmark, declined 4.33 per cent to its record low level of USD 60.10 per barrel in futures trade.

Analysts said the new set of US tariffs including the massive 104 per cent levy announced on Chinese imports effective Wednesday, dented sentiments further.

Stock market benchmarks that rebounded from record low levels on Tuesday closed Wednesday's session significantly lower with the 30-share BSE Sensex ending 379.93 points, or 0.51 per cent, down at 73,847.15, while the Nifty falling 136.70 points, or 0.61 per cent, to 22,399.15 points.

On Monday, both the indices crashed over 5 per cent before closing nearly 3 per cent lower.

Foreign institutional investors (FIIs) offloaded equities worth Rs 4,358.02 crore on a net basis on Wednesday, according to exchange data. PTI HVA DRR

Source: PTI