Indian Rupee Hits 94-USD Mark, Declines by 33 Paise

Rupee Extends Losing Streak to Fourth Consecutive Session

The Indian rupee continued its downward trend, settling 33 paise lower at 94.11 (provisional) on Thursday. This marks the fourth consecutive session of losses for the rupee, which has breached the 94-level for the second time in a month. The decline in the rupee comes as crude oil prices soar, amid uncertainty over US-Iran peace talks moving to an uncertain trajectory.

Massive selling of domestic equities and a continuous withdrawal of foreign funds have weighed heavily on the domestic unit. The rupee has lost over 1 per cent in the past week, according to forex traders. At the interbank foreign exchange market, the rupee opened at 94.03 and hit an intra-day low of 94.17 against the US dollar. However, it also touched the day's high of 93.98 before ending at 94.11 (provisional) against the US dollar, logging a loss of 33 paise from the previous closing level.

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The rupee has declined 34 paise to settle at 93.78 against the US dollar on Wednesday, marking the third straight day of fall. In the past four sessions, the domestic unit has lost 120 paise, or nearly 1.3 per cent, since the closing level of 92.91 recorded on April 17. The rupee had previously breached the crucial 94-a-dollar level for the first time on March 23 and reached its lowest-ever intra-day level of 95.22 on March 30.

However, the rupee had recovered since then, following a slew of measures from the Reserve Bank of India. The dollar index, which gauges the greenback's strength against a basket of six currencies, was 0.12 per cent higher at 98.53. Brent crude, the global oil benchmark, was trading 1.88 per cent higher at USD 103.83 per barrel in futures trade.

According to Anuj Choudhary, Research Analyst at Mirae Asset ShareKhan, the rupee fell for the fourth consecutive day and breached the 94-mark, taking cues from weak domestic markets and a strong dollar. Choudhary attributed the rupee's weakness to the surge in crude oil prices and global market sentiments deteriorating amid uncertainty over US-Iran talks.

In the domestic equity markets, the 30-share Sensex crashed 852.49 points, or 1.09 per cent, to settle at 77,664.00, while the Nifty tanked 205.05 points, or 0.84 per cent, to 24,173.05. Foreign Institutional Investors offloaded equities worth about Rs 2,078.36 crore on Wednesday, according to the exchange data.

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V K Vijayakumar, Chief Investment Strategist, Geojit Investments Ltd, said that the fundamental factor behind the rupee's weakness is the rising current account deficit caused by high crude prices and sustained FPI outflows from India. Vijayakumar projected that so long as these factors remain the same, the rupee will remain weak, and if crude prices rise again due to escalation of the conflict, the rupee will depreciate further.

Prospects of global trade through the Strait of Hormuz remain uncertain following Iran's attack on three ships on Wednesday after the US began imposing a sea blockade of Iranian ports last week. President Donald Trump has extended a ceasefire even as negotiations for a truce in West Asia remain stalled.