The rupee registered a fresh all-time closing low of 71 against the US dollar. That also marked the life-time low touched at the lowest point during the session. Continued demand for the US currency amid rising crude oil prices dragged the rupee to fresh record lows. The rupee has depreciated more than 10 per cent so far this year. Concerns about rising inflation on the back of high global crude prices and consistent selling by foreign funds from the equity markets also weighed on the rupee.
"The rupee has made a new record low of 71 today on back of rising crude oil prices in the international market. Emerging market currencies are under pressure, this has also weighed on the rupee," said Rushabh Maru, research analyst, Anand Rathi.
Crude oil prices slipped to trade around $77.37 a barrel. Concerns over the impact of a global trade war depressed sentiment, although easing of oversupply-related concerns limited the downside.
Analysts said the Reserve Bank of India is intervening very selectively to contain volatility.
"The dollar index continues to remain higher on expectations of aggressive interest rate hike by the Federal Reserve. The RBI is intervening very selectively to contain volatility." The dollar index - which measures the greenback against six major currencies - rose to 94.82 in recent trade.
State Bank of India (SBI) said the rupee is overvalued and there is no need to panic. "You need to look at what's happening globally. Argentina, Indonesia...most of the currencies are losing against the dollar. In fact, the fall of the rupee against the dollar has been much lesser compared to most other currencies," SBI managing director PK Gupta said.
Mr Maru of Anand Rathi shared similar views. "The RBI is unlikely to intervene aggressive as the rupee is still overvalued and currencies of EMEs (emerging market economies) are depreciating sharply," he said.
The rupee has been the worst hit among large emerging market peers, losing over 10 per cent so far this year.
The rupee had closed at 70.74 against the American currency the previous day.
(With agency inputs)
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