Forex traders said the rupee which started the day on a positive note witnessed heavy volatility during the session as uncertainty over the economic impact of coronavirus spooked investors.
At the interbank foreign exchange market, the local currency opened at 72.50. During the day it saw a high of 72.43 and a low of 73.34 against the American currency.
The domestic unit finally settled at 73.19 against the greenback, down 43 paise over its previous closing price of 72.76. This is the lowest closing level since November 1, 2018.
In the three consecutive sessions of fall till Tuesday, the domestic unit has depreciated by 160 paise.
"Rupee fell to the lowest level in more than a year following an increase in number of reported cases on coronavirus in India. Market participants will be keeping an eye on the expected synchronised move from Central banks and that could trigger a move for the greenback," said Gaurang Somaiyaa, Forex & Bullion Analyst, Motilal Oswal Financial Services.
Somaiyaa further added that the rupee (spot) is expected to quote with a negative bias and in the range of 72.80 and 73.50.
Meanwhile, Prime Minister Narendra Modi on Tuesday said that he held an extensive review on the preparedness for novel coronavirus.
"Had an extensive review regarding preparedness on the COVID-19 Novel Coronavirus. Different ministries and states are working together, from screening people arriving in India to providing prompt medical attention," he said in a tweet.
The Reserve Bank on Tuesday said it is closely monitoring global as well as domestic situation regarding the impact of deadly coronavirus and ready to take necessary action to ensure orderly functioning of financial markets.
On the equity front, the 30-share index surged 479.68 points or 1.26 per cent to end at 38,623.70 with 28 of its constituents ending in green. The broader NSE Nifty jumped 170.55 points or 1.53 per cent to close at 11,303.30.
"The panic of corona plays into our domestic market as well as the global front which has forced the funds outflows. The next important level for rupee now is 73.25-73.30 which can be tested in coming days," said Jateen Trivedi, Senior Research Analyst (Commodity & Currency) at LKP Securities.
Foreign institutional investors remained net sellers in the Indian capital markets, offloading equities worth a net Rs 2,415.80 crore on Tuesday, according to provisional exchange data. Meanwhile, global crude oil benchmark, Brent futures, rose 2.56 per cent to trade at USD 53.23 per barrel.
The dollar index, which gauges the greenback's strength against a basket of six currencies, rose 0.23 per cent to 97.57.
The Financial Benchmark India Private Ltd (FBIL) set the reference rate for the rupee/dollar at 72.2420 and for rupee/euro at 79.7605. The reference rate for rupee/British pound was fixed at 92.7404 and for rupee/100 Japanese yen at 66.73.
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