On Wednesday, the Indian rupee was yet again weakening, losing 29 paise to end at another all time low of 94.05 (provisional) against the U.S dollar. This fall was experienced in the face of sustained outflows of foreign institutional investors (FII) and on-going geopolitical tension in West Asia which have maintained market sentiments in check.
The rupee opened at 93.94 in the interbank foreign exchange market and was trading within a small margin of 93.86 to 94.08 throughout the day before closing at its lowest-ever level. According to Forex traders, the domestic currency had not improved, even with the advantageous conditions of a weak U.S. dollar and a falling world price of crude oil, because of the constant outflow of capital and international uncertainty.
The dollar index, a gauge of the greenback against a basket of leading currencies, was down 0.17 percent at 99.26, reflecting somewhat softness in the U.S. currency. Meanwhile, the world oil standard Brent crude fell by 4.33 percent to $99.97 per barrel in futures trade, providing some relief to oil-importing countries such as India.
Markets were strong on the domestic equity front despite the currency weakness. The BSE Sensex soared 1,205 points, or 1.63, to close at 75,273.45 and NSE Nifty increased 394.05 points, or 1.72, to close at 23,306.45.
Nevertheless, the intensive selling by foreign investors, who sold 8,009.56 crore equity on Tuesday, persisted in putting pressure on the rupee, to demonstrate the thin margin between good performance in the equity and the currency market.