The rupee plunged 37 paise to close at an all-time low of 81.90 (provisional) against the US dollar on Wednesday as the strengthening of the American currency overseas and risk-averse sentiment among investors weighed on the local unit.
In the intraday trade, the rupee slipped below the 82-level for the first time against the American currency, as a negative trend in domestic equities and significant foreign fund outflows sapped investor appetite.
At the interbank foreign exchange market, the local currency opened at 81.90, then fell further to close at an all-time low of 81.90 against the American currency, registering a decline of 37 paise over its previous close. On Tuesday, the rupee settled 14 paise higher at 81.53 against the dollar.
The rupee has nose-dived to a fresh record low amid the risk-averse mood in the markets, said Sugandha Sachdeva, Vice President - Commodity and Currency Research, Religare Broking Ltd. The slide in the domestic equities and a strong greenback getting close to the crucial 115 mark, almost more than a 20-year-high, also dragged the local unit down, Sachdeva added.
"The greenback has surged around 19.50 per cent for the year. Most of the Asian currencies, including the local unit, are reeling under pressure amid the monetary tightening campaign in the West and concerns about a global economic slowdown," Sachdeva said. Sachdeva further added that limited intervention by the RBI amid declining forex reserves is also leading to the current bout of selling spree witnessed in the rupee.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, advanced 0.43 per cent to 114.59. According to experts, the focus will now shift to the RBI's meeting this week, with its decision due on Friday.
Global oil benchmark Brent Crude futures fell 0.41 per cent to USD 85.92 per barrel. On the domestic equity market front, the 30-share BSE Sensex dropped 509.24 points or 0.89 per cent to end at 56,598.28, while the broader NSE Nifty fell 148.80 points or 0.87 per cent to 16,858.60.Foreign institutional investors were net sellers in the capital market on Tuesday as they offloaded shares worth Rs 2,823.96 crore, as per exchange data.