The dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.33 per cent higher at 104, tracking rising US yields amid fears of higher interest rates.
The rupee extended its losses and closed at a record low of 77.50 (provisional) against the US dollar on Monday, falling by 60 paise, under pressure from a firming US currency overseas and foreign fund outflows.
Forex traders said risk appetite has weakened amid rising concerns about inflation, which could trigger more aggressive rate hikes by global central banks.
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.
On Friday, the rupee had lost 55 paise to close at 76.90.
In the last two trading sessions, the rupee has lost 115 paise against the greenback.
“Indian rupee spot fell to record low, tracking weakness in Asian peers amid a firmer dollar index and increased US Treasury yields. Equity markets witnessed a sharp sell-off as real rates in the US turned positive and investors assessed the need for a risk aversion. Higher rate hikes to overcome inflation,” said Royce Varghese Joseph – Research Analyst – Currency & Energy, Anand Rathi Shares and Stock Brokers.
Joseph further said, “Higher crude oil prices and rising domestic inflation, well above RBI’s upper band, could push FIIs selling off domestic securities. Meanwhile, RBI’s off-cycle meeting on May 4 pushed up the rupee. Didn’t do anything to strengthen it. Going forward, we can see rupee weakening at spot 77.8 level.”
The dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.33 per cent higher at 104, tracking rising US yields amid fears of higher interest rates.
Global oil benchmark Brent crude futures fell 1.68 per cent to $110.50 a barrel.
The 30-share BSE Sensex closed 364.91 points or 0.67 per cent lower at 54,470.67, while the broader NSE Nifty ended 109.40 points or 0.67 per cent lower at 16,301.85.
Foreign institutional investors remained net sellers in the capital markets on Friday as they sold shares worth Rs 5,517.08 crore, according to stock exchange data.