Rupee slumps 30 paise to 74.58 against US dollar

PTI, Jan 4, 2022, 6:09 PM IST

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Mumbai: Snapping its three-session rising streak, the rupee tumbled 30 paise to close at 74.58 against the US dollar on Tuesday amid elevated crude oil prices and a strong greenback overseas.

Forex traders said growing concerns over the Omicron variant of the coronavirus and its impact on economic recovery weighed on the local unit.

At the interbank foreign exchange market, the local currency opened at 74.49 and witnessed an intra-day high of 74.46 and a low of 74.61 against the US dollar.

The local unit finally settled at 74.58, down 30 paise over its previous close of 74.28.

The dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.02 per cent up at 96.23.

Meanwhile, Brent crude futures, the global oil benchmark, advanced 0.39 per cent to USD 79.29 per barrel.

On the domestic equity market front, the BSE Sensex ended 672.71 points or 1.14 per cent higher at 59,855.93, while the broader NSE Nifty jumped 179.55 points or 1.02 per cent to 17,805.25.

Foreign institutional investors remained net buyers in the capital market on Monday, as they purchased shares worth Rs 902.64 crore, as per exchange data.

On the domestic macroeconomic front, India’s exports in December surged 37 per cent on an annual basis to USD 37.29 billion, the highest-ever monthly figure, on the back of healthy performance by sectors like engineering, textiles and chemicals, even as the trade deficit widened to USD 21.99 billion.

Imports in December too rose by 38 per cent to USD 59.27 billion on account of an increase in oil imports, which soared 65.17 per cent to USD 15.9 billion, government data showed on Monday.

”The Indian rupee depreciated against the US currency on Tuesday, weighed down by prospects of an earlier-than-anticipated interest rate hike by the Federal Reserve,” said Sriram Iyer, Senior Research Analyst at Reliance Securities.

Most of the Asian peers were weak this Tuesday and weighed on the local unit.

The spread of the Omicron variant of the coronavirus in India also made investors risk-averse and weighed on sentiments.

”The US dollar was trading with gains on Tuesday evening against the basket of currencies, boosted by expectations of the US Federal Reserve rate hikes,” Iyer said.

According to Jateen Trivedi, Senior Research Analyst at LKP Securities, the rupee fell as the US dollar and crude prices traded on a positive note.

”Lockdown or restrictions in Maharashtra can give further weakness as major cities witnessed a rise in COVID-19 cases affecting small businesses,” Trivedi said, adding that ”Rupee can be seen in the range of 74.40-74.85”.