Mumbai, March 25 The rupee plunged by 29 paise to close at a record low of 94.05 (provisional) against the US dollar on Wednesday, as heavy outflows by foreign investors and rising tensions in the Middle East kept investors on edge.
Even a drop in global crude oil prices, a weaker US dollar, and positive sentiment in the domestic equity markets could not provide any relief to the local currency, forex traders said.
At the interbank foreign exchange market, the local currency opened at 93.94 against the US dollar and traded in the range of 93.86-94.08, before settling at an all-time low of 94.05 (provisional), down 29 paise from its previous close.
The rupee had fallen by 23 paise to close at 93.76 against the US dollar on Tuesday.
"The markets were in a risk-on mode, but the rupee continued to be sold against the dollar, with month-end demand keeping bids high despite the stock markets rising and the dollar index falling. All risk assets were up against the dollar as markets were expecting some agreement between the two warring countries, the US and Israel, and Iran," said Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP.
"We expect the RBI to maintain the level of 94 in the current financial year and possibly bring it down to 93.30 to 92.80," he added, stating that the rupee is likely to trade in the range of 93.25-94.25.
The dollar index, which measures the strength of the US dollar 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 8,009.56 crore on a net basis on Tuesday, according to exchange data.