The rupee weakened to its lowest in nearly a month, tracking a decline in domestic stocks as inflation surged and as oil prices climbed to their highest in nearly three weeks on supply fears from the prospect of more sanctions on Russia as the crisis in Ukraine deepens.
Reuters reported the rupee was last trading at 76.28 per dollar versus its close of 76.1750 on Wednesday, after touching a low of 76.43, its weakest since March 22. Markets were closed on Thursday for Mahavir Jayanti and Dr Babasaheb Ambedkar Jayanti and on Friday on account of Good Friday.
On Monday, domestic stocks plunged sharply, dragged lower by heavy selling pressure in information technology (IT) stocks. The ongoing Russia-Ukraine crisis and rising inflation dented investor sentiment.
Wholesale price inflation data for March suggests spiralling price pressures. And that does not yet fully reflect the fallout of the Ukraine war, which has pushed energy rates and commodities' costs to surge.
Government data on Monday showed the wholesale price-index-based inflation (WPI) rose to 14.55 per cent from a year ago, marking the highest since November 2021, and double-digit prints for the 12th straight month.
"Supply shortages and price increases in a number of input goods due to the Russia-Ukraine conflict will keep domestic inflation high in the coming months, setting the stage for front-loaded monetary policy tightening by the central bank," Rahul Bajoria, chief economist at Barclays, told Reuters.
Also, a surge in crude oil prices kept investors on edge.
Supply worries pushed crude oil prices to their highest in nearly three weeks as the prospect for more sanctions on Russia has increased, with peace talks having ended rather abruptly and weighed on the energy-sensitive rupee.
With the country dependent on imports for about 85 per cent of its oil needs, that sharp rise in crude will hurt India's trade balances.
What has not helped the rupee is foreign institutional investors (FIIs) remaining net sellers. Indeed, stock exchange data showed FIIs offloaded Rs 2,061.04 crore worth of domestic shares.