Rupee drops by 8p to 73.42 on forex outflows, firm crude

The rupee declined by 8 paise to close at 73.42 against the US currency on Wednesday, snapping its four-day gaining streak due to risk aversion in the global markets and surge in crude oil prices.At the interbank forex market, the local unit opened lower at 73.51 against the greenback and traded in the range of 73.39 to 73.51 during the day.


PTI | Mumbai | Updated: 12-05-2021 17:35 IST | Created: 12-05-2021 17:35 IST
Rupee drops by 8p to 73.42 on forex outflows, firm crude
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The rupee declined by 8 paise to close at 73.42 against the US currency on Wednesday, snapping its four-day gaining streak due to risk aversion in the global markets and surge in crude oil prices.

At the interbank forex market, the local unit opened lower at 73.51 against the greenback and traded in the range of 73.39 to 73.51 during the day. The rupee finally ended at 73.42 against the American currency, registering a fall of 8 paise over its previous closing of 73.34. Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, rose 0.14 per cent to 90.26.

''Indian Rupee depreciated amid risk aversion in the global markets and surge in crude oil prices. Market sentiments are hurt as investors are worried over rising inflationary pressure in the US and escalating geopolitical tension between Israeli and Palestinians,'' said Saif Mukadam, Research Analyst, Sharekhan by BNP Paribas.

Further, the rupee slipped on concern that rising COVID-19 cases in India and lockdown restriction in some states may hurt economic recovery. Market participants remained cautious ahead of CPI data from the US, Mukadam added.

However, a sharp fall was prevented on weakness in dollar and expectation of improved macroeconomic data, he said.

Brent crude futures, the global oil benchmark, were trading 0.55 per cent up at USD 68.93 per barrel.

On the domestic equity market front, the BSE Sensex ended 471.01 points or 0.96 per cent lower at 48,690.80, while the broader NSE Nifty declined by 154.25 points or 1.04 per cent to 14,696.50.

Foreign institutional investors (FIIs) remained net sellers in the capital markets, as they pulled out Rs 336.00 crore on Tuesday, as per provisional data.

Meanwhile, India saw a record 4,205 COVID-19 fatalities in a day taking the death toll to 2,54,197, while 3,48,421 new coronavirus infections were reported, according to the Union Health Ministry data updated on Wednesday. ''After four days of winning streak, the rupee fell on the back of a rebound in the dollar index and US treasury yields ahead of US CPI data,'' said Dilip Parmar, Research Analyst, HDFC Securities.

On the domestic data front, the most important release of the day will be the India CPI, Parmar said adding that the base effects and lockdown/ restriction will continue to distort the inflation figures on a year-on-year basis while industrial output data for March will be better than previous reading.

According to Sriram Iyer, Senior Research Analyst at Reliance Securities, the rupee, along with other Asian currencies came under pressure on worries that growing inflationary pressure in the US may prompt the Federal Reserve to scale back stimulus.

''Traders are gravitating around the dollar as the market expects US CPI to rise by 3.6 per cent in April, the largest increase in almost a decade. If the inflation figure comes in line with market expectations then bets for a monetary tightening sooner than expected will push the USDINR spot prices even higher,'' said Rahul Gupta, Head Of Research- Currency, Emkay Global Financial Services.

Gupta further noted that if US CPI falls short of the forecast, then dollar will continue to remain subdued with a downside pressure on USDINR spot.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)

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