Rupee weakens for fourth session in a row, weighing on dollar
The rupee weakened on Tuesday, marking a fourth straight session of losses as the dollar reigned supreme on expectations of an aggressive interest rate hike roadmap by the Federal Reserve to keep inflation in check.
Reuters quoted that the rupee last changed hands at 76.4954 per dollar and PTI reports that the coin has settled at 76.51, down 22 steps from the previous close of 76.29.
The rupee fluctuated between a high of 76.25 and a low of 76.53 against the US currency during the session.
According to Dilip Parmar, Research Analyst, HDFC Securities, the rupee fell after foreign capital outflows from domestic equities.
Indeed, the coin was also hit by significant capital outflows and a sell-off in domestic equities later in the day due to inflation concerns and weaker-than-expected earnings reports so far.
“The sharp sell-off in domestic equities may have prompted aggressive bids by foreign portfolio investors (FPI) and speculators. Anindya Banerjee, VP of currency derivatives and Interest-rate derivatives at Kotak Securities said it is becoming nervous about buying the rupee long-term.
“In the near term, volatility could be high as USDINR trades with the upside and in a wide range of 76.20 and 76.80 per dollar,” he added.
While the global financial markets are experiencing intense volatility driven mainly by the ups and downs and news flows from the Russo-Ukrainian war, currency markets have been dominated by the strength of the dollar. la in recent weeks.
Sriram Iyer, Senior Research Analyst at Reliance Securities, told PTI: “Global investors flocked to safe-haven currencies with signs of higher global bond yields. Higher commodity prices, hawkish central banks and geopolitical worries have hampered the global growth recovery.”
A firmer dollar index, foreign capital outflows and higher crude oil prices could push USD/INR towards 76.70, while central bank dollar supply could limit upside momentum, He added that the pair is expected to hold support around the psychological 76 level.
The greenback rose to hit a two-year high on Tuesday, an indicator of the dollar’s performance against six major currencies pushed above the 101 mark.
The energy-sensitive rupee has also fallen since Russia’s invasion of Ukraine in late February, with crude and commodity prices rising to multi-year highs and stabilizing above average.
With India dependent on oil imports for about 85% of its needs, concerns about a growing external balance have hurt the rupee.
The rupee has fallen for the fourth day in a row against the dollar.