Rupee Declines To 16-Month Low At 75.60 Against Dollar Amid Foreign Fund Outflows
The rupee declined by 10 paise to settle at a 16-month low of 75.60 against the US dollar amid foreign fund outflows from equities and a stronger dollar in the overseas markets. At the interbank foreign exchange market, the local unit opened at 75.45, then pared its initial gains and touched a low of 75.60 against the dollar. The domestic unit finally settled at its day's low of 75.60, down by 10 paise against its previous close.
Previously, the local unit closed at this level on July 1, 2020. On Wednesday, the domestic unit fell to a near two-month low of 75.50 against the US dollar, as the Reserve Bank of India's bi-monthly monetary policy decision could not encourage forex market participants. Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.20 per cent up at 96.08.
According to traders, concerns over the impact of new COVID variant on the global economy also weighed on investor sentiments. Oil prices were lifted by optimism that the Omicron mutation might not have a significant impact on oil demand.
The Reserve Bank of India maintained the borrowing costs at a record-low for the ninth consecutive time, as it decided to continue supporting economic growth amid uncertainty over the impact of the Omicron strain on the economy.
Mr Amit Pabari, MD, CR Forex:
''The rupee weakened towards 75.50 levels, being the lowest since October 12th, as the Reserve Bank of India left interest rates steady and decided to continue with its accommodative stance while ensuring that inflation remains within its target.
That apart, Fitch Rating's cut of India's economic growth forecast to 8.4% for the current fiscal year dented sentiments further. Additionally, the dollar outflows related to retro tax refund also kept the rupee under pressure.
Moving ahead, on the global front, data suggested US job openings surged in October while hiring decreased, indicating intense worker shortage, which could hamper employment and the overall economic growth, thereby keeping the dollar at edge. Focus shifts to tomorrow's US Consumer Price Index (CPI) which is the Fed's favorite measure of inflation for further momentum.''
Domestic Equity Markets Today:
On the domestic equity market front, the BSE Sensex ended 157.45 points or 0.27 per cent higher at 58,807.13, while the broader NSE Nifty rose 47.10 points or 0.27 per cent to 17,516.85.
Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities Limited:
''Despite witnessing a choppy trading session, the markets maintained their positive momentum as investors put money in the beaten down stocks. After the post morning selloff, the Nifty took the support near 17400 and reversed sharply to hover between 17425- 17535 levels.
On daily charts, the index has formed a Hammer candlestick formation which indicates indecisiveness between bulls and bears. The short-term formation is still on the bullish side but before any fresh breakout, the market may consolidate within the range of 17350 to 17575.''
According to exchange data, the foreign institutional investors were net sellers in the capital market on Wednesday as they offloaded shares worth Rs 579.27 crore. Brent crude futures, the global oil benchmark, declined 0.46 per cent to $75.47 per barrel.
