Rupee falls to a new low; US presidential elections, Fed meeting cited as reasons

MUMBAI: The rupee continued its precarious ride, plumbing further on Tuesday, despite the broader equity market making a sharp rally towards the second half.

After closing at a record 84.11 to the dollar Monday, the currency plunged to 84.13 in opening and recouped a bit to close at 84.1225 on Tuesday as persistent foreign fund outflows and a muted trend in domestic equities dented investor sentiment in the earlier part of the trade. And nobody believes this is the bottom.

Forex traders said all eyes are on the US presidential polls and markets are bracing for potential volatility over the coming days, especially with the Federal Reserve’s monetary policy meeting scheduled later this week.

At the interbank forex exchange, the rupee opened at 84.13 against the greenback, down 2 paise over its previous close when it plumbed 4 paise to settle at 84.11.

According to Anil Kumar Bhansali, the head of treasury at Finrex Treasury Advisors, the pressure on the rupee is due to the uncertainty about the outcome of the ongoing US presidential elections that had rattled stock markets across the world yesterday while the domestic market is under persistent foreign fund outflows. Till the poll results are conclusively out, the volatility will continue, he added.

Meanwhile, the Dalal Street made a smart rally on value buying after the deep cut it saw in the morning trade and closed sharply higher with the Sensex rallying 694 points on late buying in banking, steel and oil & gas shares amid firm trends in global equities.

The broader Nifty climbed 217.95 points or 0.91 percent. The Sensex had hit a low of 78,296.70 and Nifty plumbed 23,842.75 in early trade. But value buying in the afternoon session helped indices recover losses and closed in the green.