Remit or hold? Indian rupee hits new all-time low against UAE dirham

The rupee plunged by 60 paise to record low levels of 83 for the first time against the US dollar (22.6 against the UAE dirham) on Wednesday amid unabated foreign capital outflows and a strong dollar in the overseas markets.

Besides, rising crude prices in the international markets and risk-averse sentiment among investors weighed on the local currency, traders said.

The rupee had moved in a narrow range in the past three sessions on dollar selling by PSU lenders possibly on behalf of the RBI for curbing volatility and the US dollar index hovering near 112 level.

However, the dollar index breached the 112.55 level on Wednesday while US Treasury yields surged to a 14-year high, triggering a panic selling in the rupee, according to traders.

Major global currencies also took a hit with the greenback hitting a 32-year high against the Japanese yen and approaching the historic level of 150. The Euro declined 0.8 per cent while the British pound fell by 0.6 per cent against the US dollar on Wednesday. At the interbank foreign exchange market, the local currency opened strong at 82.32 but later pared gains to hit an all-time trading low of 83.01 against the American currency.

The rupee finally settled at a record low of 83.00, showing net loss of 60 paise -- its sharpest single day loss since September 22. In the previous session on Tuesday, the rupee slipped 10 paise to end at 82.40 against the dollar.

The rupee slid by nearly 2 per cent or 160 paise this month to hit the record low of 83 level due to a surging dollar. The local unit had breached the 82 mark on October 6.

Jateen Trivedi, VP Research Analyst at LKP Securities said that the rupee witnessed fresh lows at 83.00 on the back of panic selling in rupee amid rising dollar rates taking support at 112 and spiking above 112.55.

"Indian rupee underperformed among Asian currencies as corporate dollar outflows, weaker Chinese yuan and position unwinding by traders ahead of near-month contract expiry. Dismal economic data from Europe and UK pushed the dollar index higher which also weighed on the rupee," said Dilip Parmar, Research Analyst, HDFC Securities.

In the near-term, spot USD/INR is expected to head higher amid a bullish technical set-up. It has resistance at 83.50 and support shifted to 82.05, Parmar added.

"The RBI, near 82.40 levels, has supported for the last few sessions, protecting the rupee. It looks like the RBI has moved away from the market. The pair has experienced a panic buying," said Jigar Trivedi, Senior Research Analyst- Commodity & Currency at Reliance Securities.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, advanced 0.31 per cent to 112.48.

Global oil benchmark Brent crude futures rose 0.82 per cent to USD 90.77 per barrel.

On the domestic equity market front, the 30-share BSE Sensex gained 146.59 points or 0.25 per cent to end at 59,107.19, while the broader NSE Nifty advanced 25.30 points or 0.14 per cent to 17,512.25.

Foreign Institutional Investors (FIIs) remained net sellers in the capital markets as they offloaded shares worth Rs 453.91 crore on Wednesday, according to exchange data.

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