The rupee extended its losses into early Thursday after closing at a new all-time low, even as the dollar took a breather after heavy gains and as global stocks tumbled on increasing concerns that aggressive tightening by global central banks could choke growth.
Bloomberg showed the partially-convertible rupee weakened past its previous lifetime low close, while PTI reported that the currency was last changing hands at 77.74 per dollar in early trade.
At the interbank foreign exchange, the rupee opened at 77.72 against the American dollar, then lost ground to quote at 77.74, registering a fall of 12 paise from the previous close.
On Wednesday, the rupee closed at its lowest ever of about 77.61 against the greenback on worries over stubborn inflation and economic slowdown.
While the rupee has closed at a new lifetime-weak level for the fourth time in the last nine days, the currency’s losses could have been much more if the Reserve Bank of India had not intervened.
India’s central bank has defended the rupee by burning through its foreign exchange reserves since the rupee hit a record low for the first time this year in March, days after Russia invaded Ukraine.
The war on the edge of Europe has weighed on global risk assets on worries of a further push to already high inflation and worries that the resultant central bank action could weigh on economic growth.
Domestic equity benchmarks were also red after reversing a two-day relief rally in the previous session, tracking a deep sell-off in global risk assets.
Indeed, broader Asian equities tumbled after a sell-off in the US Indexes overnight, with the Nasdaq and the S&P 500 dropping 3 per cent as a rally in growth shares before that faded on slowdown concerns.
Safe-haven currencies, including the dollar, eased on Thursday, pausing for breath after big gains from the previous session.
Poor US housing data added to slowdown concerns, and Federal Reserve Chair Jerome Powell had ratcheted up his hawkish rhetoric on Tuesday by saying the central bank would push interest rates as high as needed to stem a surge in inflation that he said threatened the foundation of the economy.
Joseph Capurso, a currency strategist at Commonwealth Bank of Australia, wrote in a client note that Powell’s stance “makes it hard to achieve a ‘soft landing’ for the US economy given the long lags between changes in monetary policy and changes in inflation. The darkening outlook for the US economy supports the USD and safe-haven currencies.”