MUMBAI: The rupee closed at a record low of 85.77 against the dollar on Friday, marking its ninth consecutive week of losses. The decline is attributed to the drop in the Chinese yuan, which weakened past the 7.3 mark, as well as the dollar’s rise.
The rupee hit its lowest intraday level at 85.80, before settling at 85.77 – down 2 paise from its previous close.
Meanwhile, the country’s foreign exchange reserves fell for the fourth consecutive week and stood at an eight-month low of $640.3 billion as of Dec 27, Reuters reported. Foreign currency assets dropped by $4.6 billion to $551.9 billion. However, gold reserves increased by $541 million to $66.3 billion. Special Drawing Rights (SDRs) decreased by $12 million to $17.9 billion, while India’s reserve position with the IMF remained unchanged at $4.2 billion.
The rupee depreciated by 0.2% over the week. The dollar index surpassed 109, driven by expectations of fewer rate cuts and a strong US economy. The rupee was under pressure despite a slight softening of crude oil prices. Brent crude fell 0.4% to $75.60 per barrel.
Traders are focused on the impact of US economic data, with the US jobs report due next Friday and inflation data scheduled for Jan 15. Analysts predict the rupee could touch 86/$ in the short term.
Dealers said that corporates were buying the dollar on dips while RBI was ensuring that there was enough supply of the greenback at higher levels. Jateen Trivedi of LKP Securities noted a strong dollar index and rising crude prices, both of which are contributing to pressure on the rupee.