Analysts believe that a combination of surge in crude prices and trade war tensions weighed on the rupee.
Selloff in the last couple of hours ensured that the rupee ended the session at a record low. The currency closed at 72.97 per US dollar on Tuesday, according to Reuters. It fell to 72.98 per US dollar mark on an intraday basis, data further revealed.
The rupee had opened marginally lower at 72.55 per dollar versus Monday's close 72.51.
Analysts believe that a combination of surge in crude prices and trade war tensions weighed on the rupee.
“The weakening started around mid-afternoon. Oil prices spiked based on reports that Saudi Arabia was comfortable with Brent trading above USD 80 per barrel. Additionally, China also spoke about retaliatory tariffs to US imposing import tariffs on USD 200 billion Chinese goods and services. These were the major factors that dragged the rupee today,” Anindya Banerjee, Deputy Vice-President, Currency Derivatives, at Kotak Securities told Moneycontrol.
US President Donald Trump Monday announced imposing new tariffs on an additional USD 200 billion worth of imports from China, escalating the trade war with the Asian giant.
Alleging that China has been unwilling to change its unfair trade practices, Trump said the new additional tariff structure would be effective September 24 from when it would be at 10 percent until the year end, but would increase to 25 per cent level from January 1.
Banerjee also added that ‘heavy’ intervention from the Reserve Bank of India (RBI) could not support the rupee as well. “The demand from offshore was exceptionally heavy and that led to this kind of spike in the rupee,” he added.