The rupee on Wednesday recovered from record low levels to settle higher by 15 paise at 76.68 (provisional) against the US dollar following gains in domestic stocks and some weakness in the greenback against global currencies. The rupee opened weak at 76.86 at the interbank forex market and then fell further to an all-time low of 76.88 during the day.
Later, the domestic unit recovered the lost ground in line with surging stock markets and finally settled at 76.68, higher by 15 paise over its last close of 76.83 against the US dollar.
Indian stocks were trading higher while the US dollar losing some ground against the euro and the pound in European trade strengthened the rupee.
Brent crude dropped 8 per cent to USD 17.78 per barrel while oil for Indian basket also eased by 0.68 per cent to USD 20.42 per barrel in early trade which supported the local currency.
"USD/INR spot breached fresh record high of 76.90, however, it didn't sustain and fell on dollar selling ahead of the Facebook and Reliance deal. Facebook plans to invest nearly USD 5.7 billion, the money will hit forex market in tranches either end of this month or sometime next month," Rahul Gupta, Head of Research- Currency, Emkay Global Financial Services said.
Gupta, however, noted that global market is still risk averse amid the coronavirus pandemic. "This gloominess regarding the deep economic downturn may weigh on Indian rupee, thus, unless 76.50 and 76 doesn't break on immediate basis we expect USD/INR spot to trade towards 77 and beyond levels."
The number of cases around the world linked to the new coronavirus has crossed over 25.51 lakh. In India, nearly 20,000 coronavirus cases have been reported so far.
"If coronavirus cases continue to increase on the global and local front then we can expect spot to breach 77.50 and then 78 level," Gupta said.
On the domestic equity market front, the 30-share index ended 742.84 points or 2.42 per cent higher at 31,379.55. The wider NSE Nifty surged 205.85 points, or 2.29 per cent, to finish at 9,187.30.
"The rebound in domestic equities and dollar selling by banks on behalf of the central bank supported the rupee to erase opening losses. Facebook's USD 5.7 billion investment into Reliance Jio also enthused rupee bulls," said Devarsh Vakil, Head Advisory, HDFC Securities.
Vakil added that "sharp fall in crude oil supported local currency. Near term focus will be on government announcements to bolster the economy and COVID-19 related developments".
"Indian Rupee looks to remain under pressure amid the economic distress caused by the coronavirus outbreak and significant outflows from the domestic equities. As of now renewed strength in dollar index is further weighing on the local unit," said Sugandha Sachdeva, VP-Metals, Energy & Currency Research, Religare Broking.
"In spite of the historical collapse in crude oil prices, rupee could not benefit and has still continued on the downwards trajectory. In the current landscape, once we see a break past 77 mark, the level of 77.50 looks quite likely on the cards," Sachdeva added.
Foreign institutional investors (FIIs) were net sellers in the capital markets, as they sold shares worth Rs 2,095.23 crore on Tuesday, as per provisional data.
The Financial Benchmark India Private Ltd (FBIL) set the reference rate for the rupee/dollar at 76.6516 and for rupee/euro at 83.0878. The reference rate for rupee/British pound was fixed at 95.1354 and for rupee/100 Japanese yen at 71.31.
The dollar index, which gauges the greenback's strength against a basket of six currencies, fell by 0.19 per cent to 100.06.