Rupee ends flat at 78.04 against US dollar

PTI | | Updated on: Jun 14, 2022

New Indian Currency with Symbol - 3D Rendered Image | Photo Credit: Muralinath

Rising crude oil prices and persistent foreign capital outflows weigh on the domestic unit

The rupee surrendered early gains to close unchanged at its lifetime low of 78.04 against the US dollar on Tuesday amid a weak greenback overseas.

Forex traders said lacklustre domestic markets, elevated crude oil prices and persistent foreign capital outflows weighed on the local unit.

At the interbank forex market, the rupee opened at 78.02 against the greenback and witnessed an intra-day high of 77.90 and a low of 78.07. It finally settled at 78.04, unchanged from the previous session.

The dollar index, which gauges the greenback's strength against a basket of six currencies, fell 0.05 per cent to 105.02.

"The Indian rupee has been on a downward trajectory since the beginning of the year and has depreciated around 5 per cent so far in 2022.

"Along with rising crude oil prices, the prime culprit behind the rupee losing value against the dollar is the sharp rally in the greenback, which has risen by around 10 per cent year-to-date towards a fresh two-decade peak," said Sugandha Sachdeva, Vice President - Commodity and Currency Research, Religare Broking Ltd.

The US dollar is witnessing safe-haven flows as market participants are bracing for rapid-fire rate hikes by the US Fed in its battle against inflation, which has raised the risks of a growth slowdown, Sachdeva said.

This is leading to massive capital outflows from domestic equities. In its battle against scorching inflation, the US Fed might even look at raising the interest rate by around 75 bps at its June meeting which shall be a key headwind for the rupee in the near term, Sachdeva added.

Global oil benchmark Brent crude futures advanced 0.72 per cent to $123.15 per barrel.

Foreign institutional investors remained net sellers in the capital market on Tuesday as they offloaded shares worth Rs 4,502.25 crore, as per exchange data.

Published on June 14, 2022
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