The Indian currency-- Rupee-- continued its losing mementum early trade on March 23, shrinking 41 paise to a fresh all-time low of 93.94 against the US dollar. One of the main reasons behind the declining trend in the rupee is the rising crude prices due to the ongoing war in West Asia, which kept the greenback strong.
In addition, continued foreign capital outflows and volatility in domestic equity markets further weakened the local currency in the morning session.
At the interbank forex, the local currency opened at 93.84, down 41 paise from its previous close, before falling to a record low of 93.94 against the US dollar. The dollar crossed the Rs 93 mark for the first time on Friday. It fell 64 paise to touch an all-time low of 93.53.
"The fall in rupee was very big considering that India is now paying USD 50 more on crude it imports from the Gulf per barrel. The Reserve Bank of India (RBI) was present at various levels, but it only allowed the rupee to fall as demand for dollars was very high," Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP, said.
"Expectation is that the RBI may step in to control further depreciation, but the demand from oil and FPIs will continue to remain high," Bhansali said.
Meanwhile, the dollar index, which measures the greenback's strength against a basket of six currencies, was trading up 0.02 per cent at 99.66.
Brent crude, the global benchmark, fell 0.60 per cent to $112.90 a barrel.
In the domestic equity market, the Sensex fell 1,306.27 points, or 1.75 per cent, to 73,226.69, while the Nifty fell 418.25 points, or 1.81 per cent, to 22,696.25.
Foreign institutional investors sold equities worth Rs 5,518.39 crore on a net basis on Friday, according to exchange data.
Meanwhile, India's foreign exchange reserves declined by US$7.052 billion to US$709.759 billion for the week ended March 13, the RBI said on Friday.
(With inputs from PTI)