Rupee Hits Fresh Record Low Against US Dollar Amid West Asia Crisis

The rupee slumped 20 paise to close at a fresh record low of 93.96 against the US dollar on Wednesday as heavy FII outflows and simmering tensions in West Asia kept investors on the edge.

Even a drop in global crude oil prices, a weaker greenback, and positive sentiments in the domestic equity markets could not provide any respite to the local unit, forex traders said.

At the interbank foreign exchange, the local unit opened at 93.94 against the US dollar and traded in the range of 93.86-94.13, before settling at an all-time low of 93.96, down 20 paise from its previous close.

The rupee dropped 23 paise to close at 93.76 against the US dollar on Tuesday.

"Markets were in risk-on mode, but the rupee was still getting sold against the dollar with the month-end demand keeping the bids high despite the stock markets moving up and the dollar index down.

"All risk assets were up against the dollar as markets were expecting some agreement to happen between the two warring countries, the US-Israel and Iran," Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP, said.

"We expect the RBI to protect the level of 94 in the current financial year and possibly take it down to 93.30 to 92.80," he said, adding that the rupee is likely to trade in the range of 93.25-94.25.

The dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.17 per cent lower at 99.26.

Brent crude, the global oil benchmark, was trading 4.33 per cent lower at USD 99.97 per barrel in futures trade.

On the domestic equity market front, the Sensex surged by 1,205 points, or 1.63 per cent, to 75,273.45 points, while Nifty was up 394.05 points, or 1.72 per cent, to 23,306.45.

Foreign institutional investors sold equities worth Rs 1,805.37 crore on a net basis on Wednesday, according to exchange data.