Continued foreign capital outflow, rise in crude oil prices put pressure on the rupee
Continued foreign capital outflow, rise in crude oil prices put pressure on the rupee
The rupee on Tuesday fell 48 paise to close at a record low of 78.85 (provisional) against the US dollar, buoyed by continued foreign capital outflows and buoyancy in crude oil prices.
In the interbank forex market, the rupee opened at ₹78.53 against the greenback and finally closed at ₹78.85, down 48 paise from its previous close.
During the session, the rupee touched an all-time low of Rs 78.8550 against the US currency.
Anuj Choudhary, Research Analyst, BNP Paribas, Sharekhan, said, “The Indian rupee slipped to an all-time low against the US dollar amid a weak domestic equity market and buoyant crude oil prices. Continued selling by foreign investors also weighed on the rupee. put pressure on.” Told.
The domestic markets are expected to trade on a negative note for the rupee on risk aversion and continued selling pressure from foreign institutional investors (FIIs). Higher oil prices could weigh on the domestic currency as well, Mr. Chowdhury said.
“The Indian rupee touched an all-time low of Rs 78.85 against the US dollar in recent days amid sluggish capital market participation coupled with FII outflows. A sharp rise in crude oil prices from $105 to $114 also weighed on the rupee. Supply pressure on the downside, said Jatin Trivedi, VP Research Analyst, LKP Securities.
Mr. Trivedi further said that sustained selling by foreign investors and fiery tone of the Fed has led to the depreciation of 100 paise in the rupee in six trading days.
“If there is resistance to the fall in crude oil prices, further weakness may continue,” he said.
According to Sugandha Sachdeva, Vice President – Commodity and Currency Research, Religare Broking, the Indian rupee fell to a fresh low against the dollar due to a sluggish trend in the domestic equity market and strong gains in crude oil. oil prices.
OPEC members Libya and Ecuador are suspending oil production amid political unrest, so a lack of supply is causing oil prices to rise again. In addition, all eyes are on the G7 meeting for further signs as member nations consider a new set of sanctions, including a proposal to impose a price cap on Russian oil imports.
“Higher demand from the US and easing of sanctions in China could further push up oil prices and act as a major headwind for the domestic currency,” Ms Sachdeva said.
Tight financial conditions and rising inflation are triggering vague concerns of a global growth slowdown, while favoring the safe-haven dollar index.
“Going forward, we expect the rupee-dollar exchange rate to remain weak in the near term where it may test 79.20 against the US dollar. However, RBI may use its forex reserves to contain additional volatility. likely to continue. Indian Rupee, which will provide some cushion to the domestic currency,” Ms. Sachdeva said.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.01% higher at 103.95.
Markets are reassessing their expectations of a Fed rate hike. Traders can also take cues from US consumer confidence data, which is expected to turn worse over the past month.
“Markets may also take cues from Fed Chair Jerome Powell’s speech at the ECB Forum later this week. Rupee may trade in the range of ₹78-₹79.50 in the near term,” Mr. Chowdhury said.
Global oil benchmark Brent crude futures rose 1.89% to $117.26 per barrel.
On the domestic equity market front, the 30-share BSE Sensex closed 16.17 points or 0.03% higher at 53,177.45, while the broader NSE Nifty ended 18.15 points or 0.11% higher at 15,850.20.
Foreign institutional investors were net sellers in the capital market on Tuesday as they sold shares worth ₹1,244.44 crore, according to stock exchange data.