The rupee hit an all-time low, falling below Rs 80 against the US dollar

The rupee declined 13 paise to close below the 80 mark for the first time against the U.S. currency on Wednesday due to strong dollar demand from importers amid high crude oil prices.

At the interbank foreign exchange market, the local currency opened at ₹79.91 and later slid to a low of ₹80.05 to a dollar.

The rupee traded in a range of ₹79.89 to ₹80.05 in the day trade. It finally settled at the day's low level of ₹80.05, showing a loss of 13 paise over the previous close. 

Following currency inflows and rumoured RBI intervention, the rupee strengthened on Tuesday from its record low of 80.05 to close 6 paise higher at 79.92 against the US dollar.

Significant dollar demand from oil importers, high crude oil prices, and worries over an expanding trade deficit, according to forex traders, dampened market morale.

"Gains in crude prices over the past few days have caused Brent to bounce back above $105 while the rupee has remained stable at about 80.00 due to RBI's lack of action. In the near future, the rupee will trade between 79.75 to 80.25, "the VP Research Analyst at LKP Securities, Jateen Trivedi, said

According to Mr. Trivedi, the rupee is still mostly declining notwithstanding the RBI's actions regarding global payment gateways or increases in import taxes on basic goods.

At $580.252 billion, India's foreign exchange holdings were down $27.05 billion from March-end 2022.

"The dollar index has showed a correction from 109 to 106.50 in a span of week," he added. "This will hold the rupee's loss in majority."

The dollar index, which measures how strong the dollar is relative to a basket of six different currencies, decreased 0.11 percent to 106.56.

The benchmark for world oil, Brent crude futures, dropped 1.73 percent to $105.49 a barrel.

The BSE Sensex closed 629.91 points or 1.15 percent higher at 55,397.53 on the domestic equity market, while the larger NSE Nifty gained 180.30 points or 1.1 percent to 16,520.85.

According to exchange data, foreign institutional investors continued to be net purchasers on Tuesday's stock market, buying shares worth 976.40 crore.