Mumbai, March 20 The rupee fell by 82 paise, or nearly 1%, to settle at an all-time low of 93.71 (provisional) against the US dollar on Friday, weighed down by persistent outflows of foreign funds and a sharp rise in crude oil prices amid mounting geopolitical tensions.
Forex traders said the Indian rupee is under tremendous pressure due to surging crude oil prices and a shift towards risk aversion, which has dampened investor sentiment.
Furthermore, heightened geopolitical uncertainty is driving up energy costs, which could widen the trade deficit and fuel inflationary pressures, they added.
At the interbank foreign exchange market, the local currency opened at 92.92 against the US dollar and soon breached the 93-mark for the first time. It continued to decline throughout the session and eventually settled at 93.71 (provisional), down 82 paise from its previous close.
On Wednesday, the rupee slumped by 49 paise to close at its previous record low of 92.89 against the US dollar.
Forex markets were closed on Thursday due to Gudhi Padwa.
"The rupee hit fresh all-time lows on Friday amid geopolitical tensions in West Asia and FII outflows. Rising global crude oil prices have also put pressure on the rupee," said Anuj Choudhary, Research Analyst, Commodities Research, Mirae Asset Sharekhan.
All key central banks – the US Federal Reserve, ECB, Bank of England, and Bank of Japan – kept interest rates unchanged in their respective monetary policy meetings, citing concerns about inflation, and said they were ready to adjust monetary policy accordingly, he said.
"We expect the rupee to trade with a negative bias as escalating geopolitical tensions and rising crude oil prices may continue to put pressure on the rupee," he added, noting that the USD-INR spot price is expected to trade in the range of Rs 93.20-93.80.
The dollar index, which measures the strength of the US dollar against a basket of six currencies, was trading 0.35% higher at 99.58.
Brent crude, the global oil benchmark, was trading 1.84% higher at USD 110.7 per barrel in futures trading.
On the domestic equity market front, the Sensex rebounded from Thursday's crash, and was up 325.72 points, or 0.44%, to 74,532.96, while Nifty rose by 112.35, or 0.49%, to 23,114.50 points.
Foreign institutional investors sold equities worth Rs 7,558.19 crore on a net basis on Thursday, according to exchange data.