Why did the rupee crack so sharply on 24th February?

With the crisis in Ukraine worsening, the Indian rupee went into a virtual free fall on Thursday. Globally, there was a rush of money towards gold and other dollar assets leading to the dollar hardening. That weakened the rupee in relative terms. There was also the Brent crude angle, with oil prices above $100/bbl. This clearly implies higher inflation and higher trade deficit, both of which are negative pressures on the rupee value.

At a more practical level, there was a lot of dollar buying that happened on Thursday. Several Indian banks were buying dollars on behalf of the oil marketing companies like BPCL, HPCL and IOCL after crude crossed $100/bbl. This aggressive dollar buying actually pushed the rupee to as low as 76/$, before closing the day at 75.65/$, on the strength of RBI intervention. Mecklai Financial pegs the rupee value to weaken as low as 76.40/$ shortly.