Mumbai, Nov 28 : The rupee today tumbled by 30 paise to end at a fresh 2016 low of 68.76 due to deteriorating sentiment in the midst of worsening impact of fund outflows. Frantic dollar demand from corporates along with aggressive hedging strategy adopted by importers in the wake of currency volatility predominately took a toll on domestic unit despite moves by the central bank to stabilise the currency. Massive funds outflows in the wake of impending US Fed rate hike and a bullish dollar overseas have hit the rupee sentiment, a forex dealer commented. Ongoing redemption pressure on foreign currency non-resident (FCNR) deposits also aided to the rupee woes, the dealer said further. Also Read - US Puts India Back on Currency Manipulation Watchlist | Here's What it Means For Rupee & Economy
At the Interbank Foreign Exchange (forex) market, the local unit opened modestly higher at 68.42 from last Friday’s closing value of 68.46. However, the initial positive momentum failed to gain ground with the currency retreating sharply to hit a intraday low of 68.80 before ending at 68.76 – its lowest closing level so far this year – showing a steep loss of 30 paise, 0.44 per cent. The rupee has shed 3.95 per cent of its value since the beginning of 2016. Also Read - India Most Corrupt Nation? At 39%, India Emerges as Country With Highest Bribery Rate in Asia
The rupee had plunged to a record low of 68.8650 in day trade last Thursday before recovering on RBI intervention to settle at 68.74 — the lowest level in 39 months. It had closed at a record low of 68.80 on August 28, 2013 impacted by the so-called taper tantrum after the Fed’s signal to end its unprecedented bond purchases. Foreign investors have pulled out close to USD 5 billion from the capital markets in November so far amid concerns over the impact of demonetisation coupled with fears of rate hike by the US Federal Reserve. Also Read - Rupee Rises For Third Day, Up 27 Paise to 74.19 Per USD
In worldwide trade, the greenback fell back modestly against all its major rivals at the beginning of the week after its longest winning streak in three years. The dollar has strengthened nearly 6 per cent so far this month after the US presidential election outcome as markets speculated buoyant fiscal stimulus to boost economy that will boost inflation and aggressive Fed rate hike cycle. The US dollar index was quoted higher at 101.51 in late afternoon. Meanwhile, RBI today fixed the reference rate for the dollar at 68.7235 and euro at 73.1768.