Rupee slumps 24 paise to close at 75.39 against US dollar

The rupee plunged by 24 paise to 75.39 (provisional) against the US currency at close on Friday due to fears of an aggressive rate hike by the Federal Reserve after US inflation raced to a 40-year high in January. Forex traders said muted domestic equities, sustained foreign fund outflows and elevated crude oil prices weighed on the local unit.

At the interbank foreign exchange, the rupee opened at 75.40 against the American dollar, and later witnessed an intra-day high of 75.27 and a low of 75.46 against the greenback.

The local unit finally ended the day at 75.39, down 24 paise from the previous close.

On Thursday, the rupee had settled at 75.15 against the US dollar, after the Reserve Bank of India kept the benchmark lending rate unchanged and said it will continue with the accommodative stance.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.35 per cent higher at 95.88.

The rupee became the worst-performing currency among Asian peers following policy divergence, broad-based strength in dollar, risk-averse sentiments and foreign fund outflows from equities, said Dilip Parmar, Research Analyst, HDFC Securities.

Growing expectations of 50 bps hike by US Fed in March after a four-decade high inflation print, dampened the risk appetite and gave a desired push to dollar, Parmar said.

Consumer prices in the US spurted by 7.5 per cent in January compared with a year earlier, which was the steepest year-over-year increase since February 1982 .

On the domestic equity market front, the 30-share Sensex ended 773.11 points or 1.31 per cent lower at 58,152.92, while the broader NSE Nifty settled down 231.10 points or 1.31 per cent at 17,374.75.

Global oil benchmark Brent crude futures rose 0.45 per cent to USD 91.82 per barrel.

Foreign institutional investors remained net sellers in the capital market on Thursday as they offloaded shares worth Rs 1,732.58 crore, as per stock exchange data. PTI DRR MR

Leave a comment