Unabated FII outflows hammer down Re to record low
Home currency falls 17 paise to record low of 77.61/ USD; Stronger greenback in the overseas markets and surging crude oil prices also weighed on the local unit
Mumbai: The rupee declined by 17 paise to close at its fresh lifetime low of 77.61 against the US dollar on Wednesday amid unabated foreign fund outflows and concerns over aggressive rate hikes by the US Federal Reserve to tame inflation. A stronger greenback in the overseas markets and crude oil prices surging over 1 per cent to $113 per barrel also weighed on the local unit.
"The dollar index took support near 103.50 and the capital market witnessed profit booking from higher levels, sending rupee into weakness. The rupee weakened on concerns that the US Federal Reserve might consider more rate hikes to control inflation," said Jateen Trivedi, V-P (research analyst) at LKP Securities.
Fed chair Jerome Powell said the central bank will have to consider moving more aggressively" if inflation that is running at a four-decade high fails to ease after earlier rate hikes. "Comments from the Fed governor suggest that rate hike trajectory could continue in the coming meeting as well," said Gaurang Somaiya, Forex & Bullion Analyst, Motilal Oswal Financial Services.
At the interbank foreign exchange market, the rupee opened lower at 77.57 and later hit the day's low of 77.61 as the dollar rebounded in global markets following hawkish comments from US Federal Reserve chief Jerome Powell. The domestic currency finally ended at its all-time low of 77.6?1, showing a loss of 1?7 paise over its previous close of 77.44.
Crude oil prices jumped more than 1 per cent to $113.45 per barrel on expectations of demand recovery in China as well as supply concerns as Russia's oil production declined in April. Meanwhile, the British pound fell against the US dollar after the UK inflation rose to a 40-year high of 9 per cent in April. The dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.3 per cent higher at 103.59. Meanwhile, the 30-share BSE Sensex settled 109.94 points or 0.20 per cent lower at 54,208.53. During the day, it hit a high of 54,786 and a low of 54,130.89. The broader NSE Nifty dipped 19 points or 0.12 per cent to finish at 16,240.30.