On Wednesday, the rupee experienced a notable depreciation, dropping by 4 paise to reach an all-time closing low of 83.41 (provisional) against the US dollar. This decline was attributed to the strength of the American currency on the global stage. Forex traders pointed out that while there was some support from a significant fall in crude oil prices – dropping from USD 76 per barrel to below USD 73 – a muted trend in equity markets introduced a negative bias against the local unit.

At the interbank foreign exchange market, the rupee opened at 83.39 against the greenback and traded within a tight range of 83.38-83.41. Ultimately, it settled at its lifetime low of 83.41 (provisional), marking a 4 paise fall from the previous close. Notably, on the prior day, the domestic currency settled at 83.37 against the dollar. The rupee had previously recorded its lowest closing level of 83.40 on November 24 of the same year.

Government data released on Tuesday revealed that India’s retail inflation had risen to a three-month high of 5.55% in November, though it remained within the Reserve Bank of India’s (RBI) comfort zone of less than 6%. In contrast, industrial production growth accelerated to a 16-month high of 11.7% in October, primarily due to double-digit growth in manufacturing, power, and mining sectors’ output, according to official data.

Forex traders are now eagerly awaiting the US Federal Reserve’s monetary policy decision, set to be announced on Wednesday. Meanwhile, the dollar index, measuring the greenback’s strength against a basket of six currencies, was trading 0.09% higher at 103.55 on the same day. Additionally, Brent crude futures, the global oil benchmark, experienced a 0.38% decline, reaching USD 72.96 per barrel.