In early trade on Thursday (09-06-2022), the rupee fell 10 paise to 77.78 versus the US dollar, as rising crude oil prices and continued foreign capital outflows impacted investor confidence.
A declining rupee raises inflation by raising the cost of imports, putting additional pressure on the Reserve Bank of India (RBI) to stabilize the currency’s value. The economy does not benefit from a fluctuating rupee that falls repeatedly.
The rupee began at 77.74 versus the dollar on the interbank foreign exchange, before losing momentum to quote at 77.78, a drop of 10 paise from the previous close.
The rupee rebounded from its record low against the dollar on Wednesday, closing 10 paise higher at 77.68. The rupee is lingering around its all-time low of 77.78 versus the US dollar, despite the US currency’s strength in the international market and robust crude oil prices.
Anil Kumar Bhansali, Head of Treasury, Finrex Treasury Advisors, said the rupee began on a pessimistic note as crude oil reached USD 125 per barrel. “Only the Reserve Bank of India (RBI) is sustaining the rupee, as the inflows have completely dried up. Foreign Portfolio Investors (FPIs) continue to sell stocks while buying the US dollar, “according to Bhansali.
Furthermore, Asian currencies are trading on a negative note, according to Bhansali, who also stated that a rate rise by the RBI on Wednesday will have “no influence on the rupee” since “dollar buyers are in abundance.” Brent crude prices increased 0.26 % to USD 123.90 per barrel, the global benchmark.
In the meantime, the dollar index, which measures the strength of the greenback against a basket of six currencies, was down 0.01 % at 102.52. On the domestic front, the 30-share Sensex was down 163.34 points, or 0.30 %, at 54,729.15, while the wider NSE Nifty was down 41.00 points, or 0.25 %, at 16,315.25.
According to stock exchange statistics, foreign institutional investors were net sellers in the capital market on Wednesday, offloading shares worth Rs 2,484.25 crore.
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