The rupee fell to a fresh all-time low of 77.69 vs the dollar early Tuesday, with traders looking to the local share market for signals on capital flows, even as the US currency struggled to find a footing as investors reduced bets on whether interest rate hikes will fuel additional dollar gains.
The dollar has dipped from a two-decade high this week and was somewhat down across the board in early Asia trade, while US bond rates, key support for the currency, have dipped marginally as speculators fear aggressive near-term rises could slow longer-run economic development.
The rupee plummeted 14 paise to 77.69 versus the US dollar in early trade on Tuesday, from a previous record low of 77.50 on Thursday, after touching a new intra-day low of 77.63.
The currency rebounded to settle at 77.31 on Friday after the RBI intervened in the open market to stem losses. Because of the Buddha Purnima holiday, the Indian FX market was closed on Monday. The currency had already broken 77 versus the dollar for the first time in March.
Indian market indexes were trading higher, with all eyes on the upcoming IPO of state-run Life Insurance Corp, the country’s largest.
Traders will also be on the lookout for central bank intervention if the currency suffers significant losses throughout the day.