Rupee Hits Lifetime Low of 89.95 Against Dollar

 Mumbai: The Indian rupee fell to a record low of 89. 95 against the US dollar on Tuesday, extending losses on lingering uncertainty over the Indo-US trade deal, muted foreign portfolio inflows in equities and an elevated trade deficit. Foreign investors sold over ₹1,170 crore on Monday, adding to sustained pressure on domestic equities. Traders said that nationalized banks were seen buying dollars consistently for oil marketing companies while some banks were seen selling dollars on behalf of the central bank to protect the 90 level. The rupee has been consistently falling after it touched 88. 41 on November 4 and could be seen as a devaluation by the central bank rather than a depreciation, they said. The Indian Rupee has been one of the worst performing currencies with a fall of more than 5 per cent in the current financial year and may continue to be so till the final outcome of the India-US trade deal, experts said. Markets now await the outcome of the RBI’s Monetary Policy Committee meeting that starts on Wednesday which would provide a clearer stance on the rupee’s future trajectory. Economists remain divided on the rate cut decision with the majority expecting a status quo. The RBI has kept its policy rate steady at 5. 50 per cent, balancing growth and inflation concerns. RBI Governor Sanjay Malhotra has said there is scope for rate cuts, but the timing is dependent on upcoming data and the Monetary Policy Committee's assessment. During the day, the currency touched 89. 9475 against the US dollar before ending at 89. 87, down nearly 0. 4 per cent on the day and logging its fifth consecutive daily fall. Shortly after the local spot

market closed, the rupee weakened to 90 per U. S. dollar on the inter-bank order matching system before trimming losses. Anil Bhansali, head of treasury at Finrex Treasury said, “The way rupee has fallen it looks more like devaluation than depreciation because the currency is undervalued, economic fundamentals are perfect, CAD is well in control. Possibly to compensate the exporters from losses incurred due to US tariffs the government and RBI may have taken the route of depreciation till the trade deal is finalized and is out. The RBI has slowed the rupee’s fall but just to curb sharp volatility. Uncertainty caused by the non-implementation of the US-India trade deal and a wider trade gap due to buying of precious metals have also been reasons for the depreciation. ” Meanwhile, the dollar index which gauges the greenback's strength against a basket of six currencies, was trading 0. 06 per cent higher at 99. 41. Brent crude, the global oil benchmark, was trading 0. 25 per cent lower at $63. 03 per barrel in futures trade. Dollar-rupee forward premiums also surged on Tuesday, reflecting the rising cost of hedging against rupee weakness as the currency nears the 90 per U. S. dollar mark. The 1-month forward premium rose to over 19 paisa, the highest since May while the 1-year implied yield climbed 7 basis points to 2. 33%. According to traders, the rise in USD/INR forward premia reflects the market's caution over potential rupee depreciation risk due to external factors like Fed easing and domestic uncertainties over RBI’s policy direction amid expectations of widening interest rate differential.