The Reserve Bank of India intervened in currency markets to ensure that the Rupee did not breach the psychologically crucial Rs 80 to the dollar mark in the spot market after the currency breached the barrier in the offshore and over-the-counter markets after market hours on Thursday, currency traders said.
The rupee opened at 79.93 against the dollar on Friday, hitting an intraday low of 79.96, before recovering to close at 79.88.
With the exception of Friday, the rupee marked a new closing low on every trading day this week as fears of a 100-basis-point rate hike by the Federal Reserve and the consequent strengthening of the dollar index eroded appetite for emerging market currencies.
With the Federal Reserve poised to hike rates by 100 basis points at its meeting towards the end of July, there is a high chance that the rupee will breach the 80 mark in the coming weeks.
Market participants will also follow US President Joe Biden’s visit to Saudi Arabia closely. Many expect him to push Saudi and Opec to pump more oil to reduce global crude prices, which have been stoking inflation worldwide.
The rupee, like almost all global currencies, has been depreciating and repeatedly hitting all-time lows, and the RBI has been using the country’s foreign exchange reserves to control the fall of the rupee. But despite all the attempts, the Indian rupee hit a new record low of 79.83 against the dollar yesterday.