Rupee slumps 31 paise to over four-week low of 75.09/USD

PTI, Jan 27, 2022, 6:25 PM IST

Mumbai:  Registering its third straight session of loss, the rupee on Thursday depreciated by 31 paise to close at an over four-week low of 75.09 against the US dollar, tracking the strength of the American currency after a hawkish US Fed policy stance.

Forex traders said muted domestic equities, sustained foreign fund outflows and firm crude oil prices also weighed on the local unit.

At the interbank foreign exchange market, the local currency opened at 75.18 against the greenback and witnessed an intra-day high of 75.07 and a low of 75.31 during the session.

The rupee finally settled at 75.09, down 31 paise over its previous close.

On Tuesday, the rupee had finished at 74.78 against the US dollar. The forex and equity markets were closed on Wednesday on account of Republic Day.

This is the third straight session of loss for the local unit, during which it has declined by 63 paise.

“Indian rupee depreciated against US dollar on massive risk-off sentiments after the US Fed’s hawkish stance,” said Dilip Parmar, Research Analyst, HDFC Securities.

Fed, as expected, indicated a rate hike in March. Consequently, the dollar rallied following higher treasury yields. At the domestic front, India 10-year benchmark bond yield surged to 6.74 per cent, the highest since 2019, Parmar added.

The dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.33 per cent up at 96.79.

Brent crude futures, the global oil benchmark, dipped 0.01 per cent to USD 89.95 per barrel.

On the domestic equity market front, the BSE Sensex ended 581.21 points or 1 per cent lower at 57,276.94, while the broader NSE Nifty slumped by 167.80 points or 0.97 per cent to 17,110.15.

Foreign institutional investors remained net sellers in the capital market on Tuesday, as they offloaded shares worth Rs 7,094.48 crore, as per exchange data.

“The Indian rupee skidded to a four-week low as the greenback has surged to the highest levels of the year and as Brent crude firmed up further towards USD 90 a barrel, amid geo-political tensions between Russia and Ukraine,” said Sugandha Sachdeva, Vice President – Commodity and Currency Research, Religare Broking Ltd.

The dollar has bumped up against other major currencies as the US Fed struck a hawkish tone and has given strong indications of a rate lift-off starting March.

The Fed has maintained that inflation is running high and job creation has been strong in the US, justifying the need for a fast pace of rate hikes, which has led to fund outflows from emerging markets and weighed on other Asian currencies in tandem with the Indian rupee, Sachdeva said.

“Going forward, we feel that the 75.20 mark will still be a strong cushion area for the domestic currency and as the Fed’s stance is largely on expected lines, the domestic currency may find some buying interest, thereby paving the way for a recovery path. All eyes will now be on the trajectory of crude oil prices and how the situation pans out in Eastern Europe,” Sachdeva added.

Jateen Trivedi, Senior Research Analyst at LKP Securities, said, “Higher gains in crude pressured the rupee fall as well. Going ahead rupee can be seen in the range of 74.85-75.30.