The rupee fell to an all-time low against the US dollar in early trade. The rupee declined for a third straight quarter versus the US dollar as concerns over sustained inflation and continuing foreign fund outflows weighed. At the interbank foreign exchange, the rupee opened at 80.10 against the dollar, then lost ground to quote at 80.15, registering a fall of 31 paise from the last close. Forex traders said the dollar index gained after Federal Reserve Chair Jerome Powell adopted a hawkish tone to battling inflation.
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According to Anil Kumar Bhansali, Head of Treasury, Finrex Treasury Advisors, the rupee opened on a weak note after a hawkish Powell kept U.S. rate hikes in prominence until inflation falls to 2%. “With 80 being allowed to be crossed over by RBI, its actions will be watched closely by traders. The next important events are PMI and NFPR of the US which will give an indication as to how the economy and labour markets are behaving,” Mr. Bhansali said. Global oil benchmark Brent crude futures advanced 0.86% to $101.86 per barrel. On the domestic equity market front, the 30-share Sensex was trading 966.68 points or 1.64% lower at 57,867.19, while the broader NSE Nifty fell 283.90 points or 1.62% to 17,275.00. Foreign institutional investors were net sellers in the capital market on Friday as they offloaded shares worth ₹51.12 crore, as per stock exchange data.
Global factors such as the Russia-Ukraine conflict, soaring crude oil prices and tightening of global financial conditions are the major reasons for the weakening of the Indian Rupee against the US dollar. The Reserve Bank of India (RBI) has been intervening in both the spot and forwards markets to slow the rupee’s fall and has taken several measures in recent weeks to boost foreign fund inflows.
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