MUMBAI, July 1 (Reuters) - The Indian rupee plunged on Friday to mark the fourth straight session of record lows, breaking below the 79-per-dollar mark, weighed down by broad strength in the greenback and as investors retreated from the domestic share markets.
The U.S. dollar remained strong against major peers due to the prospects of aggressive U.S. interest rates and fears of a widespread recession.
As of 0820 GMT, the partially convertible rupee was trading at 79.10/11 per dollar, after touching a record low of 79.1150. The unit had ended at 78.9675 on Thursday.
"The rupee-dollar exchange rate will remain volatile with a depreciation bias in near term due to a widening trade deficit, foreign portfolio investment outflows and strengthening of the U.S. dollar index," economists at rating agency CRISIL wrote in a note on Friday.
"We expect the exchange rate to settle at 78/$ by March 2023, compared with 76.2/$ in March 2022," the economists added.
Traders said there was sporadic dollar-selling intervention seen in the market, but the depreciation pressure on the rupee was large.
"Central bank currency support might continue given that imported inflation remains elevated and the rupee does not seem significantly overvalued on an REER (real effective exchange rate) basis," said Rahul Bajoria, an economist with Barclays.
"The key source of currency pressure, in our view, comes from financing the burgeoning current account deficit," he added.
Shaktikanta Das, governor of the Reserve Bank of India, has repeatedly said the country's current account gap is manageable and will not pose any challenges during the year. However, analysts believe a decline in global commodity prices is the key to managing external imbalances for India.
Oil prices extended the previous day's slump, as lingering fears of a recession weighed on sentiment, putting the benchmarks on track for their third straight weekly losses and helping limit further decline in the rupee.
Domestic shares were trading down 0.6%.
Reporting by Swati Bhat; Editing by Simon Cameron-Moore and Sherry Jacob-Phillips
Source: Reuters