Rupee Weakens Further To Close At A New All-Time Low Of 77.50
The rupee on Monday weakened further to settle at a new all-time low of 77.50, after breaking the previous record of 77.05 in the earlier session, as the market cut back on the dollar’s bounce.
PTI reported that the Indian currency fell by 76.90 to 57 percent to a new record low of 77.50 against the US dollar.
At the interbank forex market, the rupee opened at 77.17 against the greenback and finally closed at 77.50, down 60 paise over its previous close. The rupee touched its lifetime low of 77.52 during the trading session.
Forex traders said risk appetite has weakened amid rising concerns about inflation, which could trigger more aggressive rate hikes by global central banks.
Flight-to-safety trades jumped in the dollar as investors worried about rising inflation, higher interest rates and slowing economic growth concerns.
The dollar climbed to its highest level in two decades, driven by rising inflation and higher Treasury yields on an aggressive rate growth trajectory expected from the US Federal Reserve.
In addition, tighter lockdowns in China, Europe’s plan to impose sanctions on Russian oil in response to its war against Ukraine, in its third month, and slowing economic growth risks from rising commodity prices, the greenback’s safe-haven. Haven’s appeal has been boosted.
Indeed, against a basket of major currencies, the dollar peaked at 104.19 for the first time since July 2002, an increase of nearly 9 percent this year.
“It is difficult to go against the current momentum for higher yields in the near term and the strengthening of the US dollar,” said Mizuho strategists.
Persistent capital outflows have also propelled the rupee’s fall. In the first four trading sessions of May, foreign institutional investors (FIIs) remained net sellers of Indian equities for the seven consecutive months to April and pulled out over Rs 6,400 crore.
While crude oil prices were down more than 1.5 per cent on Monday, Brent futures were still trading above $110 a barrel.
The energy-sensitive rupee has been hit by a jump in crude oil prices – which have remained largely above $100 since late February, as the country relies on imports for 85 per cent of its oil needs.
Domestic equities fell on Monday, extending their weak performance tracking investors’ gloomy mood and weighing on the rupee after the latest stock exchange data, FIIs offloaded Rs 5,517.08 crore worth of shares, on Friday. Weeks pointing to a similar trend.
The rupee has lost 115 paise against the greenback in the last two trading sessions.