Mumbai, Apr 19 (PTI) Sliding for the fourth straight session, the rupee depreciated by 21 paise to close at 76.50 against the US dollar on Tuesday, hit by persistent foreign fund outflows and prevailing risk-off sentiment globally amid geopolitical tensions.
At the interbank foreign exchange market, the rupee opened at 76.34 against the American currency and witnessed an intra-day high of 76.25 and a low of 76.53.
It finally closed at 76.50, down 21 paise from its previous close of 76.29.
According to Dilip Parmar, Research Analyst, HDFC Securities, the rupee depreciated following foreign fund outflows from domestic equities.
“Global investors rushed towards safe-haven currencies taking cues of higher global bond yields. Surging commodity prices, hawkish central bank and geopolitical worries stalled global growth recoveries,” he said.
A stronger dollar index, foreign fund outflows and higher crude oil prices could push USD/INR towards 76.70 while the central bank’s dollar supply may limit the upside, he said, adding that the pair is expected to hold support around the psychologically key level of 76.
The dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.02 per cent higher at 100.79.
Global oil benchmark Brent crude futures fell 1.18 per cent to USD 111.82 per barrel.
On the domestic equity market front, the 30-share Sensex ended 703.59 points or 1.23 per cent lower at 56,463.15 points, while the broader NSE Nifty plunged 215.00 points or 1.25 per cent to 16,958.65.
Continuing their selling spree, foreign institutional investors offloaded shares worth a net Rs 5,871.69 crore on Tuesday, as per stock exchange data.
According to Sugandha Sachdeva, Vice President – Commodity and Currency Research, Religare Broking, the rupee drifted lower against the US dollar amid a sell-off in domestic equities and strength in the dollar index.
Concerns about broadening inflationary pressures and tighter monetary policy have pushed the US 10-year treasury bond yields to their highest in three years and are fuelling the strength in the dollar index which is hovering close to two-year highs.
The dollar index touched a fresh two-year high of 101.02.
Besides, the deepening crisis in Ukraine has spooked the market and accentuated supply-side constraints which are weighing on the local unit, Sachdeva said.
In the near-term, the Indian rupee is likely to trade with a negative bias, but the 76.70 mark is likely to act as a strong floor for the domestic currency and can lead to some renewed buying interest, Sachdeva added.
“Indian rupee traded lower on Tuesday on weakness in local equity markets and global risk-off sentiments. Stronger US Dollar and surge in the US treasury yields are adding to the downside pressure on Rupee,” said Praveen Singh, AVP- fundamental currencies and commodities analyst, Sharekhan by BNP Paribas.
“We expect Indian Rupee to remain subdued as Russia has intensified its attack on Ukraine, leading to deteriorating global risk sentiments. The US Dollar is also expected to remain firm amid hawkish Federal Reserve and firm US bond-yields,” Singh said.
US 10-year yield shot up to 2.907 per cent, the highest since December 2018. The rupee may trade in the range of 75.60-77.20 in the near-term, Singh said, adding, “We expect the USD-INR pair to test the all-time low of Rs 77.20 in coming weeks.” PTI DRR ABM ABM