Mumbai: The rupee pared initial gains and slumped 22 paise to close at its all-time low of 83 against the US dollar on Tuesday, pressured by a strong greenback overseas and sustained foreign fund outflows.
At the interbank foreign exchange market, the rupee opened on a positive note at 82.69 against the greenback, but pared the gains and fell to an intra-day low of 83.00.
The domestic currency finally settled at 83.00, down 22 paise over its previous close of 82.78.
The domestic currency had last closed at the 83-mark on October 19, 2021.
The dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 1 per cent higher at 104.55.
Global oil benchmark Brent crude futures inched up 0.02 per cent to USD 85.93 per barrel.
According to Dilip Parmar, Research Analyst, HDFC Securities, the Indian rupee continued its downward drift as importers rushed for dollar buying, while the inflows remained muted as traders awaited Wednesday's Federal Open Market Committee (FOMC) meeting minutes.
Spot USD-INR has been consolidating in the narrow range of 82.40 to 82.95.
"Looking at the greenback price action against the major currencies, the chance of an upward breakout is higher in the pair. Once the breakout confirms above 83, the short-covering rally will be imminent and levels of 83.50 and 83.70 can be seen in a short span of time," Parmar added.
The 30-share BSE Sensex ended 126.41 points or 0.21 per cent higher at 61,294.20, while the broader NSE Nifty climbed 35.10 points or 0.19 per cent to 18,232.55.
Foreign Institutional Investors (FIIs) remained net sellers in the capital markets on Tuesday as they offloaded shares worth Rs 628.07 crore, according to exchange data.
Anindya Banerjee, VP - Currency Derivatives & Interest Rate Derivatives at Kotak Securities Ltd, said, "Market will be nervous going into Fed minutes tomorrow night. We expect USD-INR to trade within a range of 82.70 and 83.25."
Jateen Trivedi, VP Research Analyst at LKP Securities, said the rupee has been trading between 82.50-83.00 since mid-December 2022 and looks set for another round of weakness if it breaches 83.00.
