MUMBAI, May 31: The rupee declined by 17 paise to close at its all-time low of 77.71 against the US currency on Tuesday as surging US bond yields dampened the appeal of riskier assets.
Losses in the domestic equities, high crude oil prices and forex outflows also weighed on the rupee.
At the interbank foreign exchange market, the rupee opened lower at 77.65 against the greenback and finally settled at 77.71, down 17 paise over its previous close.
During the session, the rupee touched an intra-day low of 77.71 and a high of 77.62. On Monday, the rupee settled at 77.54 against the US dollar.
This is the fifth straight monthly decline for the rupee amid weak risk sentiments, foreign fund outflows and concerns over high inflation.
The dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.5 per cent higher at 101.92.
Global oil benchmark Brent crude futures advanced 1.77 per cent to USD 123.82 per barrel.
According to Dilip Parmar, Research Analyst, HDFC Securities, the rupee has become the worst-performing currency among Asian currencies and clocked the fifth monthly decline in a row in May on the back of foreign fund outflows and slower economic growth.
“Risk sentiments remained weak on worries over hawkish central banks following higher inflation and slower growth prospects,” Parmar said.
US Treasury yields surged on Tuesday following a Federal Reserve Governor’s comments that the central bank should be prepared to raise interest rates by 50 basis points at every meeting on until inflation is decisively controlled.
“Rupee traded weak as crude prices rise towards USD 120 in WTI making it more expensive for India to import,” Jateen Trivedi, VP Research Analyst at LKP Securities, said.
On the domestic equity market front, the 30-share BSE Sensex ended 359.33 points or 0.64 per cent lower at 55,566.41, while the broader NSE Nifty fell 76.85 points or 0.46 per cent to 16,584.55.
In a hectic FII movement in the equities markets, foreign institutional investors sold shares worth Rs 46,741.52 crore while purchased stocks worth Rs 45,737.96 crore, leading to net outflow of Rs 1,003.51 crore on Tuesday, according to stock exchange data.
“The pressure on the rupee continues unabated due to the strength of the dollar, the exit by FIIs from the domestic market, and the worsening of the trade balance,” a report by Emkay Wealth Management stated.
While the RBI may have nothing against a gradual depreciation of the currency, a sudden depreciation amounting to a speculative attack will be contained by the central bank, it noted.
“A revival in macro-economic conditions, a return of the overseas funds, and an improvement in global trade conditions are required for a revival in the fortunes of the rupee,” it said.
Meanwhile, official data released on Tuesday showed that the Indian economy grew at its slowest pace in a year during January-March, pulling down the GDP growth in the full fiscal 2021-22 to 8.7 per cent as Russia’s invasion of Ukraine added a new inflation hurdle to the recovery.
The gross domestic product (GDP) expanded by 4.1 per cent in the final quarter of 2021-22, according to data released by the statistics ministry.
Also, production growth of eight infrastructure sectors rose to a six-month high of 8.4 per cent in April on the back of better performance by coal, refinery products and electricity segments and a low base in the year-ago month. (PTI)
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