Stock Indian rupees rupee
Just yesterday, the Indian rupee was clawing its way back to near 82 levels, only for a steep fall to 82.84 this afternoon. Now, hitting 83 to the dollar is looking more likely near-term. Image Credit: Reuters

Dubai: The India rupee has dropped to a new low of 83.02 after a sudden reversal in fortunes on Wednesday afternoon (October 19). Just yesterday, the INR was inching its way to near 82 levels, and it seemed it had sufficient momentum to remain around 82.20-82.40.

The previous lowest point for the INR was 82.63 on October 7. The rupee-dirham is at 22.60.

"Even this morning, it was at 82.35 to dollar, but to see the INR fall to 83 has come as a jolt," said Neelesh Gopalan, FX analyst at a Dubai fintech. "What it shows is that the efforts by the Indian central bank in recent days to stabilise the rupee has fallen short. It seems that the RBI sat on the sidelines today."

Market trends early tomorrow would dictate INR's short-term fortunes - i.e, remain below 83 to the dollar or find a way back into the 82-something range.

The strengthening of the 'Dollar Index' by 0.31 per cent, the record high inflation of 10.10 per cent in the UK, accompanied by high demand for the dollar from Indian banks have all contributed to the sudden fall of the INR which briefly touched 83.00 levels,

- Krishnan Ramachandran, CEO of Barjeel Financial Services
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Mounting geopolitical tensions amid recession fears.

The slide in other currency majors were also significantly high. Yen is at a 32-year low. The GBP and euro are at an all time low, while the Swiss franc is at par with USD. The AUD and NZD are also significantly down.

The RBI was intervening and preventing the rupee from a freefall. Now, it might have thought that it is better to stop the intervention.

Rupee might test 83.35-83.40 within a few days.

- Treasury specialist at LuLu Exchange

Analysts are scrambling to determine whether the freefall of the rupee will continue. In fact, in recent days, the RBI was active in shoring up the INR by selling dollar reserves.

This is what Sriram Iyer, Senior Research Analyst at Reliance Securities, had to say earlier in the day: "The Indian rupee settled flat (at close of trade Monday) after giving up gains against the US dollar on Tuesday on strong demand for dollars from oil companies and other importers looking to hedge near-term payments. The rupee closed at 82.36 per dollar, compared with 82.3500 in the previous session."

But "Earlier in the session (on Tuesday) the local unit tested an intra-day high of 82.0350 aided by stronger risk appetite after the dollar fell overnight and weakness in the oil prices."

All that changed Wednesday afternoon. And it is a completely different situation the rupee will face tomorrow when the market opens.