Saturday, November 26, 2022

Rupee slides by 24 paise to 9-week low

The rupee slumped further by 24 paise to close at over nine-week low of 75.60 against the US currency on Monday in line with deep losses in the stock markets and a stronger dollar as investors rushed for safe-haven assets amid geopolitical tensions.
Forex traders said a lacklustre trend in domestic equities and elevated crude oil prices weighed on the local unit.
Moreover, official data released after market hours showed that retail inflation rose to 6.01 per cent in January on an annual basis and breached the RBI’s upper tolerance level, mainly due to higher prices of certain food items.
At the interbank foreign exchange, the rupee opened at 75.53 against the American dollar, and later witnessed an intra-day high of 75.37 and a low of 75.64 against the greenback.
The local unit finally ended the day at 75.60, the lowest closing level since December 20 and a fifth consecutive session of loss. In the five sessions, the rupee has declined 68 paise.
On Friday, the rupee had plunged by 21 paise to a nearly seven-week low of 75.36 against the US currency on forex outflows and a strong dollar after a spike in inflation in the US boosted expecta-tions of an aggressive rate hike by the Federal Reserve.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six curren-cies, was trading 0.13 per cent higher at 96.21.
“The rupee depreciated for the fifth day in a row following a plunge in domestic equities and stronger dollar index,” Dilip Parmar, Research Analyst, HDFC Securities said.
The local currency was the worst performing currency among Asian currencies, ahead of retail infla-tion data, Parmar said, adding that stocks fell as geopolitical risks over Ukraine rippled through global markets.
“Near-term outlook for USD-INR remains following strength in dollar and weaker macro environ-ment. The pair is having resistance around 75.70 and support at 75.25,” Parmar said.
“The Indian Rupee depreciated against the US Dollar amid geopolitical tensions in Eastern Europe. The Rupee also came under pressure as crude oil prices surged on Monday and a rise in oil prices also threatens to add to inflationary pressures on India and widen trade deficits,” said Sriram Iyer, Senior Research Analyst at Reliance Securities.
Asian equities and currencies also came under pressure this Monday and weighed on the local unit, Iyer said, adding that the Indian government bond yields fell on Monday as traders awaited do-mestic headline inflation data.
The US Dollar was trading with gains this Monday evening in Asian trade, as investors rushed in safe-haven assets on fears that Russia is preparing to invade Ukraine.
According to Jateen Trivedi, Senior Research Analyst at LKP Securities, the rupee traded weak be-low 75.50 on back of major weakness in secondary capital markets along with higher crude prices escalation above USD 95.
The presence of Russian troops around the Ukraine border has spooked the global mar-kets. “Rupee can see appreciation on any positive update from the Russia-Ukraine tussle. The range for rupee can be seen between 75.25-76.00,” Trivedi said.
On the domestic equity market front, the 30-share Sensex ended 1,747.08 points or 3 per cent lower at 56,405.84, while the broader NSE Nifty settled down 531.95 points or 3.06 per cent at 16,842.80.
Global oil benchmark Brent crude futures fell 0.35 per cent to USD 94.11 per barrel.
Foreign institutional investors remained net buyers in the capital market on Friday as they purchased shares worth Rs 108.53 crore, as per stock exchange data.

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