The rupee breached 81 per dollar for the first time ever on Friday before recovering to under that level as the Reserve Bank of India intervened but still ended the day at its weakest level as the dollar powered ahead to a new 20-year high.
Bloomberg showed the rupee was last at 80.9738 per dollar, after hitting an all-time low of 81.2438, compared to its previous close of 80.8688, which was its weakest close until today.
PTI reported that the domestic currency fell 25 paise to provisionally close at a new all-time low of 81.04 against the US dollar.
Traders attributed the rupee’s recovery from its record low to the RBI, which likely sold dollars to arrest the dramatic decline in the domestic currency after the rupee had stood its ground remarkably in the face of a rampant dollar until Thursday’s crash.
“Definitely, for the USDINR, the time was a swift rollercoaster as the currency took almost 3 attempts and 48 trading sessions to cross and sustain above 80 levels, while it just took one session to rip off all the stability and jump to 81.00 levels quickly,” said Amit Pabari, Managing Director of CR Forex Advisors.
As we had been warning and preparing CR Forex clients for such a drastic fall in the rupee, it saved them from making losses by following correct hedging practices,” he added.
The RBI likely sold dollars via state-run banks on Friday after the rupee extended losses to hit a record low, three traders told Reuters.
“The intervention at 81.20 was quite aggressive and possibly puts a floor on the rupee for the time being,” a trader at a private sector bank said. Two state-run bank traders also confirmed that the RBI sold dollars, Reuters reported.