The rupee depreciated 13 paise to close below the 80 mark for the first time at an all-time low against the US currency on Wednesday due to strong dollar demand from importers amid high crude oil prices, the PTI reported.
At the interbank foreign exchange market, the local currency opened at 79.91 and later slid to a low of 80.05 to a dollar, according to the report.
According to the report, investors on Wednesday remained on tenterhooks on concerns about a global dollar shortage despite a broader risk asset rally and slight falls in crude oil prices.
This comes a day after the currency hit 80 against the greenback for the first time ever, and then recovered to close under that key psychological level on Tuesday.
However, equity benchmarks, Sensex and Nifty, recorded sharp gains amid positive global market trends.
The Reserve Bank of India (RBI) is prepared to sell a sixth of its foreign exchange reserves to defend the rupee against a rapid fall after it plumbed record lows in recent weeks, quoting a source privy to the development Reuters has reported.
The Indian currency has lost over 7 per cent of its value in 2022 and weakened past the psychological level of 80 per US dollar on Tuesday. However, according to the source, the fall would have been far bigger if the central bank had not stepped in to stem the decline.
In the process, the RBI’s currency reserves have depleted by over $60 billion from its peak of $642.450 billion in early September, in part due to valuation changes, but mostly because of dollar selling intervention.
Meanwhile, Chief Economic Advisor (CEA) V Anantha Nageswaran on Wednesday said that the depreciation of the rupee against the US dollar has been lower than other major global currencies such as the Euro, the British pound and the Japanese yen.
The CEA attributed rupee depreciation and other currencies against the US dollar to the aggressive monetary tightening by the US Federal Reserve.