Rupee Closes At 80 Per Dollar For The First Time Ever

The rupee closed at an all-time low of a touch over 80 per dollar after treading water for the most part on Wednesday as investors remained on tenterhooks on concerns about a global dollar shortage despite a broader risk asset rally and slight falls in crude oil prices.

PTI reported that the rupee finally settled at its lifetime low of 80.05, a loss of 13 paise from its previous close of 79.92.

That comes a day after the currency hit 80 against the greenback for the first time ever and then recovered to close under that key psychological level.

"Overall gains in crude in the last few days where Brent has risen again above $105 and lack of intervention from the RBI has kept the rupee hovering around 80.00. Going ahead, the rupee will be seen in the range of 79.75-80.25," Jateen Trivedi, VP Research Analyst at LKP Securities, told PTI.

Global stocks rallied, the US dollar lost steam, and the euro breathed a sigh of relief and extended its overnight bounce on relief Europe might be able to avoid the worst fears concerning energy shortages.

Still, the rupee could not break free and gain significantly, and instead, Bloomberg quoted the rupee lower at 79.9899, a day after hitting an all-time low of 80.06 against the dollar.

Reuters reported that the Indian rupee was held below the 80-per-dollar mark, aided by the central bank's dollar-selling intervention, traders said, while gains in the domestic share market and a fall in global crude oil prices also helped.

Against the basket of major currencies in the dollar index, the greenback was flat on the day at around 106.6, well off its two-decade peak of 109.29 last week. 

Markets have pared expectations of a 100 basis points US interest rate rise next week and now see a 23 per cent probability of such a move after policymakers poured cold water on it.

Peter Kinsella, global head of FX strategy at asset manager UBP, told Reuters that on a valuation basis, the euro was cheap and the dollar expensive, implying room for turnaround. 

But he noted an ongoing "waiting game with three big risks: the gas shutdown, China's zero-COVID policy and whether the world can avoid economic recession".

With these issues in balance, "the dollar will keep a certain risk premium," he added.