The rupee drops 30 paise to 77.55 against the US dollar in early trading

The Indian rupee opened lower at 77.52 against the US dollar on May 12. It had closed at 77.24 against the US dollar on Wednesday.

The rupee fell 30 paise to 77.55 against the US dollar when trading opened on Thursday, as a lackluster trend in domestic stock markets and a firm US currency weighed on investor sentiment.

In addition, persistent outflows of foreign funds and high crude oil prices have impacted national unity, traders said.

On the interbank exchange, the rupee opened sharply lower at 77.52 against the US dollar, then lost further ground to quote 77.55, registering a drop of 30 paise since the last close. In the initial transactions, the national currency was moving in a range of 77.50 and 77.57.

During the previous session, the rupee had settled at 77.25 against the US currency.

The dollar index, which gauges the strength of the greenback against a basket of six currencies, was trading up 0.10% at 103.95.

On the domestic stock market front, the 30-stock Sensex traded 822.94 points or 1.52% lower at 53,265.45, while the broader NSE Nifty was down 239.30 points or 1 .48% at 15,927.80.

Brent futures, the global oil benchmark, fell 1.11% to $106.32 a barrel.

The Reserve Bank is expected to raise inflation projections at the Monetary Policy Committee (MPC) meeting next month and would also consider a rate hike to rein in inflation which is above its comfort level, according to sources.

The MPC, led by the Governor of the RBI, is due to meet from June 6-8. Its mandate is to keep retail price inflation within a range of 2-6%.

US brokerage Morgan Stanley on Wednesday cut its estimate of India’s growth by 30 basis points for 2022-23 and 2023-24 on global headwinds, and warned that macro stability indicators like the inflation is expected to “worsen” in the future.

According to sources, policy rate tightening by major central banks, including the RBI, will negatively impact demand over the next 6-8 months and slow the recovery process.

Besides the Reserve Bank of India (RBI), several central banks, including the US Federal Reserve and the Bank of England, have raised their benchmark lending rates to contain inflation, which has been exacerbated by the Russian-Ukrainian conflict. .

Foreign institutional investors remained net sellers in the capital market on Wednesday as they unloaded shares worth Rs 3,609.35 crore, according to stock market data.

On Tuesday, the rupee had settled at 77.34 against the US currency.

Anindya Banerjee, Vice President, Currency and Interest Rate Derivatives at Kotak Securities Ltd, said the USDINR spot closed 9 paise lower at 77.25 levels. While most currencies are trading flat ahead of important US inflation data tonight, USDINR also remained range bound. In the near term, USDINR may continue to range between 76.80 and 77.70 spot, due to RBI intervention and IPO-related REIT flows.

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Posted: Thursday May 12th 2022, 09:29 IST


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