Mumbai: Weak global cues and domestic uncertainty over foreign investment norms in the equity market pulled the Indian rupee to a new record low of 71.97 per US dollar on Wednesday, but it later recovered.
On Wednesday, the Indian rupee opened at 71.45 per US dollar and settled at a record closing low of 71.75, weaker by 17 paise than its previous close of 71.58 per greenback.
In the intra-day trade, the Indian rupee touched 71.97 per US dollar -- the lowest ever mark -- against the greenback at the Inter-Bank Foreign Exchange Market.
"Dollar-Rupee is being driven by an inter-play of local and global factors," Anindya Banerjee, Deputy Vice President for Currency and Interest Rates with Kotak Securities, told IANS
"Globally, weakness in EM currencies is being caused by fear of fresh tariffs from US on Chinese imports as well as high oil prices is leading to weakness in rupee."
"However, we expect the central bank to step into sell dollars to protect the rupee. Over the near term, volatility can be high. A range of 71 to 72.50 is expected."
The RBI is known to enter the markets via intermediaries to either sell or buy US dollars to keep the rupee in a stable orbit.
According to Edelweiss Securities' Head of Forex and Rates Sajal Gupta: "Markets are eyeing policy makers for relief... Our macros are not worst but our currency is in a downward spiral and following all bad news leading to a panic even among investors who are now running to hedge hence adding more pressure."
"Major headwinds in coming months can make situation more precarious."
In recent days, geo-political developments over trade protectionist measures along with high crude oil prices and an outflow of foreign funds from the equities market have pulled the Indian rupee to fresh record intra-day and closing lows.