The Indian rupee continued its downward journey on Thursday, sliding another 76 paise to close below the 74 per U.S. dollar level, tracking a strong greenback overseas after the U.S. Federal Reserve surprised the market by signalling rate hike sooner than expected.
At the interbank forex market, the domestic unit opened weak at 73.65 against the American currency, then lost further ground and finally closed at 74.08, showing a fall of 76 paise over its previous close.
On Wednesday, the rupee had settled at 73.32.
The local unit witnessed an intra-day high of 73.57 and a low of 74.08 against the greenback.
The domestic currency has lost 128 paise in the eight trading sessions to Thursday.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, rose 0.6% to 91.67.
"Indian Rupee depreciated amid strong dollar. Further, risk aversion in the global markets and disappointing macroeconomic data added downside pressure," said Saif Mukadam, Research Analyst, Sharekhan by BNP Paribas.
"Dollar gained strength as U.S. Federal Reserve surprised market by signalling rate hike sooner than expected. Their median projection showed central bank lifting their benchmark rate to 0.6% from near zero by the end of 2023," Mr. Mukadam said.
On the domestic macroeconomic front, the CPI inflation accelerated by 6.3% in May 2021, compared to 4.23% in April 2021. Inflation breached Reserve bank of India's target range of 2-6%.
"Further, market participants fear that the second wave of COVID-19 infection in India has dampened the expectation of quick economic recovery. Rupee may trade in the range of 73.25 to 74.15 in next couple of sessions," he added.
On the domestic equity market front, the BSE Sensex ended 178.65 points or 0.34% lower at 52,323.33, while the broader NSE Nifty fell 76.15 points or 0.48% to 15,691.40.
Brent crude futures, the global oil benchmark, rose 0.12% to $74.48 per barrel.
Foreign institutional investors were net sellers in the capital market on Wednesday as they offloaded shares worth ₹870.29 crore, as per exchange data.
