Forex traders said, the escalation of geopolitical risks due to conflict in Ukraine, a negative trend in domestic equities and significant foreign fund outflows sapped the investor appetite
The rupee fell by 59 paise to an all-time low of 81.63 against the US dollar in early trade on Monday as the strengthening of the American currency and risk-averse sentiment among investors weighed on the local unit. At the interbank foreign exchange, the domestic unit opened at 81.47 against the greenback, then fell to 81.56, registering a fall of 57 paise over its earlier close of 80.99.
As of 12:23 pm IST, the Indian Rupee was trading at 81.63 against the US Dollar, as per Bloomberg Data. Forex traders said, the escalation of geopolitical risks due to conflict in Ukraine, a negative trend in domestic equities and significant foreign fund outflows sapped the investor appetite. Rate hikes by the US Fed and Bank of England to contain inflation sapped risk appetite, traders added.
On Friday, the rupee declined by 30 paise to close at a fresh lifetime low of 81.09 against the American currency. Sriram Iyer, a Senior Research Analyst at Reliance Securities, said, the Indian rupee is likely to remain weaker as investors expect that the US Fed will continue to hike interest rates aggressively to cool inflation. “Focus now shifts to RBI’s meeting this week, with its decision due on Friday. We expect RBI to hike rates by 50 bps to cool stubbornly high inflation and prevent the currency from weakening further,” Iyer added.
Meanwhile, the dollar index, which gauges the greenback’s strength against major currencies, advanced 0.67 per cent to 113.94. Global oil benchmark Brent crude futures fell 0.58 per cent to USD 85.65 per barrel. Meanwhile, India’s forex reserves declined USD 5.219 billion to USD 545.652 billion for the week ended September 16.