Mumbai– Exodus of foreign funds, along with an expected rise in the US interest rates and global equities sell-off plunged the Indian rupee to a fresh record low of 74.48 to a US dollar on Thursday.

However, heavy intervention by the Reserve Bank of India (RBI) and lower crude oil prices aided the rupee to recover and close at 74.13 (74.1250) to a USD.

“Heavy intervention by the RBI and a decline in international crude oil prices rescued the rupee on Thursday. The central bank aided the Indian currency to pare its morning loses,” Anindya Banerjee, Deputy Vice President for Currency and Interest Rates with Kotak Securities, told IANS.

“The fall in rupee was triggered by global equities sell-off that started from the US hit the Indian stock markets and the rupee. There is a fear of further fund outflows and this has plunged the rupee.”

The RBI is known to enter the markets via intermediaries to either sell or buy US dollars to keep the rupee in a stable orbit.

Besides, global crude oil prices which eased overnight amid a rise in US inventory helped to arrest the decline in rupee. The Brent crude oil prices stood at over $81 per barrel.

However, prices may resume their uptrend, as US sanctions on Iran begin to bite from November.

“Positive comments from government officials and Finance Ministry boosted the rupee in a tough global back drop… rupee made an intra-day high of 74.01 before closing at 74.1250,” Edelweiss Securities Head for Forex and Rates Sajal Gupta, told IANS.

“Chances of NRI bonds and FCNR (Foreign Currency Non-Repatriable) still remains an option to support the rupee and the statement that falling rupee and CAD are on top agenda of Finance Ministry boosted the rupee… they also assured that a second list for import curtailment is also being contemplated.”

At the Inter-Bank Foreign Exchange Market, the Indian rupee opened at 74.31 to a dollar and soon slipped to 74.46 to a greenback — the lowest-ever it has touched due to a massive equities sell-off and foreign fund outflows.

In addition to global equities slump, concerns that the US Federal Reserve would continue to tighten interest rates amid strengthening economy and labour market also sparked fears about capital outflows, hurting the rupee.

“The rupee continues to make a new record low, as the global and domestic equities experienced a steep sell-off. Continued FII outflows from debt and equity market is keeping sentiments bearish,” said Rushabh Maru, Research Analyst at Anand Rathi Shares and Stock Brokers.

On Thursday, provisional data with the exchanges showed that foreign institutional investors sold stocks worth Rs 2,869.41 crore.

In the last eight sessions beginning October 1, FIIs have sold shares worth about Rs 17,000 crore. (IANS)