The rupee on Monday slumped 22 paise against the U.S. dollar following heavy demand for the latter in the international markets aided by the sell off in domestic stock markets, according to analysts.
The rupee closed at 76.64, down 22 paise from its previous close of 76.42 on Friday.
“The dollar index surged as market sentiment is fragile as rising inflation will lead to a faster hike interest rate rises. Also, FII outflows,” IFA Global said in a note. “China’s COVID lockdowns and a likely EU embargo on the Russian oil imports dented investor sentiment rushing toward a safe haven dollar,” it added.
“INR remains weak tracking global cues. Despite softening crude oil prices, global sentiments remained wary amidst increasing risk to global demand given the persistence of supply led inflation prompting aggressive policy tightening on one hand while increasing COVID cases on the other,” Kotak Mahindra Bank said in a note.
The lender said the continued foreign portfolio investor (FPI) sell-off ($3.3bn in April 2022) had further weighed on the rupee. “We expect the INR to continue to trade in the 76-77.50 range in the near term given the global uncertainties,” the bank said in the note. The rupee could have lost more value. But the 4.38% correction is Brent crude prices to $101.98 has provided partial relief.
