The rupee depreciated steeply by about 82 paise on Tuesday due to unwinding of carry trades, corporate dollar demand and foreign fund outflows amid weak domestic equity market.

The rupee’s Tuesday closing level of 82.6150 per dollar was lowest since November 4. It had weakened by 47 paise/ 0.58 per cent per dollar on Monday vis-a-vis the previous close.

Anindya Banerjee, Vice-President, Kotak Securities Ltd, observed that once the spot crossed 82, stops may have been triggered of importers and bank dealers and that accentuated weakness of the rupee.

“USD-INR forward premium is trading at the lowest levels since 2011 and low forward premiums are hurting dollar supply. It is making carry trade unviable and also reducing exporter hedging. At the same time, it is making rupee vulnerable to global shocks,” he said.

Banerjee noted that the rupee has become one of the weakest currencies across a broad basket of currencies on a year-to-date basis.

However, over the near term, central bank intervention is expected to emerge at higher levels and as a result a range of 81.80 and 83.00 may unfold over the near term, he added.

IFA Global, in a report, said the rupee continued its weakness and opened at 81.94 per Dollar.

“MSCI outflows at the beginning of the month and the stoplosses getting triggered above 82 led to a further depreciation of the currency as it tested the lows of 82.62 and ended the session at almost day’s low.

“The dollar index is flat at 105.2 as dollar holds firm at these levels post positive PMI data,” per the report

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