The rupee depreciated 26 paise to 82.49 (provisional) against the US dollar on March 14 amid a stronger dollar, negative sentiment in the domestic equity market and unabated foreign fund outflows.
At the interbank foreign exchange, the domestic unit opened lower at 82.27 against the dollar and traded in a range of 82.24 and 82.50 during the intra-day. It finally closed at 82.49 (provisional) against the US currency.
This is the second consecutive day of decline in the Indian currency. On March 13, the rupee closed at 82.23 against the US dollar.
Jatin Trivedi, VP Research Analyst, LKP Securities, attributed the fall in the rupee to fears of spillover after the collapse of Silicon Valley Bank in the US.
“Rupee continues to slide as concerns over spillover fears following its collapse at Silicon Valley Bank in the US and in line with Asian peers. The rupee this time fell below the level of 82.48, which was last seen on 3 Mar 23.
“Ripple effect may keep forex market in continued volatile sessions,” he said and forecast a range between 82.20-82.75 for the rupee in forward trade.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, rose 0.26% to 103.86.
Global oil benchmark Brent crude futures fell 2.30% to $78.91 per barrel.
On the domestic equity market front, the 30-share BSE Sensex fell 337.66 points, or 0.58%, to 57,900.19, while the broader NSE Nifty declined 111.00 points, or 0.65%, to 17,043.30.
Foreign institutional investors (FIIs) were net sellers in the capital market on Monday as they sold shares worth ₹1,546.86 crore, according to exchange data.
The collapse of two banks in the US – Silicon Valley Bank and Signature Bank – has raised concerns about the health of the financial system, while US regulators are taking steps to contain the situation.
Against this backdrop, some analysts also believe that the US Federal Reserve may opt for a slower interest rate hike, even if inflation remains high.
On the domestic front, wholesale price-based inflation eased to a two-year low of 3.85% in January as prices of manufactured goods, fuel and electricity eased, even as food items remained costlier.
According to government data released on March 14, this is the ninth consecutive month of decline in the rate of inflation based on the Wholesale Price Index (WPI).