Rupee plummets 60 paise to close at all-time low of 77.50/USD
The rupee weakened further on Monday to close at a new all-time low of 77.50 after breaching the previous record of 77.05 earlier in the session as the dollar’s surge cut across markets.
PTI reported that the Indian currency plummeted 60 paise to a fresh record low of 77.50, from 76.90 against the US dollar.
At the interbank foreign exchange market, the rupee opened lower at 77.17 against the greenback and finally settled for the day at 77.50, down 60 paise over its previous close. During the trading session, the rupee touched its lifetime low of 77.52.
Forex traders said risk appetite has weakened amid mounting concerns about inflation that may trigger more aggressive rate hikes by global central banks.
Flight-to-safety trades drove that dollar surge as investors remain spooked about surging inflation, higher interest rates and slowing economic growth worries.
The dollar climbed to its highest levels in two decades, driven by higher Treasury yields on surging inflation and the expected aggressive rate hike trajectory from the US Federal Reserve.
In addition, a tightening lockdown in China, Europe’s plan to ban Russian oil in response to its war on Ukraine, in its third month, and slowing economic growth risks from spiralling commodity prices have boosted the safe-haven appeal of the greenback.
Indeed, against a basket of major currencies, the dollar topped 104.19 for the first time since July 2002, extending its almost 9 per cent rise this year.
“It is hard to go against the current momentum for higher yields and US dollar strength in the near term,” noted Mizuho strategists.
Persistent capital outflows have also driven the rupee’s fall. In May’s first four trading sessions, foreign institutional investors (FIIs) remained net sellers of Indian stocks for seven straight months to April and pulled out over Rs 6,400 crore.
While crude prices were down over 1.5 per cent on Monday, Brent futures were still trading above $110 a barrel.
The energy-sensitive rupee has taken a beating from the surge in crude prices – which have largely remained above $100 since late February, as the country depends on imports for 85 per cent of its oil needs.
Domestic equities fell on Monday, extending their weak performance tracking investors’ gloomy mood and weighing on the rupee after the latest stock exchange data showed FIIs offloaded shares worth Rs 5,517.08 crore on Friday, trends pointing to more of the same this week.
The rupee has lost 115 paise against the greenback in the last two trading sessions.
