Rupee hits new low, breaches 73 against dollar for first time

The rupee dropped to a record low on Wednesday as a sharp rise in global crude oil prices heaped more pressure on the currency, prompting the central bank to quickly intervene to slow its fall.

The domestic currency slid 34 paise to a new record low of 73.25 against the US dollar in early morning trade. 

The partially convertible rupee briefly traded stronger on the day at 72.90 per dollar against its previous close of 72.91 after the news report. It had touched a life low of 73.42 earlier in the session.

By 2:34 pm, the rupee was trading at 73.24 per dollar.

According to forex dealers, demand for the US currency from importers, along with a strong dollar overseas and rising crude oil prices, weighed heavily on the domestic currency. 

The rupee has hit a series of record lows against the dollar in the past two months, weakening to about 73 rupees against the greenback. 

That marked a decline of more than 14 per cent since the start of this year, earning it the status of the worst-performing in the region — alongside the Indonesian rupiah and Philippine peso.

The benchmark 10-year bond yield was up 6 basis points at 8.05 per cent.

Oil prices firmed on expectations of a tighter market once US sanctions start targeting Iran's petroleum industry from next month, although a strong dollar and rising US crude supply curbed gains. Prices, however, remain at highest levels since November 2014. 

Experts say that broader global concerns, which rose to the forefront in the emerging currencies sell-off following economic troubles in Turkey and Argentina, have also weighed on investor sentiment.

(With inputs from agencies)