Rupee has once again weakened at the opening trade on Thursday and trading just below the record low tracking losses in most other Asian peers. The partially convertible rupee was at 80.01/02 per dollar, compared with its close of 79.99 on Wednesday and near its record low of 80.0650 touched on Tuesday, reported news agency Reuters.
Global oil prices also declined on Thursday on the back of demand that outweighed tight global supply. Brent futures fell as much as 1.7 per cent to $105.08 a barrel. West Texas Intermediate (WTI) futures was also down one per cent to $98.87 a barrel.
In the previous session, the rupee had settled at 79.99 against the US dollar. Experts believe that the fall from here could be even steeper since a break of key psychological rate is seen to favour a free fall after, as witnessed since the rupee weakened beyond the 77 per dollar rate.
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Investors will keep a close eye on the Reserve Bank of India (RBI) as the central bank 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 reported on Wednesday.
Meanwhile, Indian companies are looking to hedge their overseas dollar debt against future depreciation in the rupee, that may trigger additional losses for the battered local currency, reported news agency Bloomberg.
The companies had $79 billion of unhedged offshore loans at the end of March, about 44 per cent of their total overseas borrowings, according to the latest data from the RBI. The cost of repaying that has been soaring as the rupee has tumbled more than 7 per cent this year.
“We have seen increased activity among corporates to hedge their dollar exposure ever since USD/INR broke above 79," according to Parul Mittal Sinha, head of India financial markets at Standard Chartered Plc. Sinha added that proportion of dollar hedged is expected to increase in the current risk-off environment, increasing demand for dollar.