The rupee on Thursday closed 2 paise lower at 77.57 (provisional) against the US dollar as crude oil prices and frequent foreign capital outflows weighed on investor sentiment.
However, gains in domestic equities and a weak US currency in the overseas market restricted the rupee’s fall, traders said.
At the interbank forex market, the rupee opened at 77.54 against the greenback and touched an intra-day low of 77.65 and a high of 77.52.
It finally closed at 77.57, down 2 paise from its previous close of 77.57.
“The Indian rupee is in line with other regional currencies, especially the Chinese yuan, depreciating against the US dollar on weak growth and expectations of central banks. Dollar demand and higher crude oil prices at the end of the month also weighed on local units. rubbed off.” Dilip Parmar, Research Analyst, HDFC Securities.
He said inflation remains the most-watched driver for investors, while markets have moved from fears of extreme inflation to growth fears amid the Russia-Ukraine war, Fed tightening and Chinese zero-Covid policy.
“Spot $/₹ is expected to trade in the range of 77.30 to 77.75 before the settlement for the month of May,” he added.
The dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.23% lower at 101.83.
Global oil benchmark Brent crude futures rose 0.81% to $114.95 a barrel.
The 30-share BSE Sensex closed 503.27 points or 0.94% higher at 54,252.53, while the broader NSE Nifty ended 144.35 points or 0.90% higher at 16,170.15.
Foreign institutional investors remained net sellers in the capital markets on Wednesday as they sold shares worth 1,803.06 crore, according to stock exchange data.
Moody’s Investors Service on Thursday lowered India’s economic growth forecast for 2022 from 9.1% to 8.8%, citing high inflation.
In its update to the Global Macro Outlook 2022-23, Moody’s said that high-frequency data shows that growth momentum from December quarter 2021 continued in the first four months this year.
However, the rise in crude oil, food and fertilizer prices will have an impact on domestic finances and spending in the coming months. An increase in rates to prevent further normalization of energy and food inflation will slow down the pace of recovery in demand, it said.