Rupee hits record low on widening trade deficit, weakness in local equities
bank capped losses.
The rupee hit a low of 84.93 against the U.S. dollar, before closing at 84.8950, down 0.04% on the day.
Benchmark Indian equity indexes BSE Sensex and Nifty 50, closed lower by over 1% each, dragged by weakness in financial stocks and Reliance Industries. Investor sentiment was also dampened after data on Monday showed that India's merchandise trade deficit rose to a record high of $37.84 billion, led by a surge in gold imports.
Foreign banks were spotted bidding for dollars, likely on behalf of custodial clients, while the Reserve Bank of India likely intervened via state-run banks to keep a lid on the local unit's decline, traders said.
The wider trade deficit has «reinforced the upward bias (on USD/INR) and a rise above 85 seems quite likely in the next few sessions,» a trader at a private bank said.
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