‘High oil prices, uncertainty amid Ukraine war, mounting inflation and prospects of aggressive monetary tightening by U.S. Fed all contributed to poor sentiment’
‘High oil prices, uncertainty amid Ukraine war, mounting inflation and prospects of aggressive monetary tightening by U.S. Fed all contributed to poor sentiment’
The Indian rupee plunged to a fresh low in less than a week on Thursday, due to elevated crude prices and rising inflation causing concern.
The currency dived to a new low of 77.63 in intraday trade but recovered slightly to 77.4563 against the U.S. dollar. The previous lowest close was 77.44 reported on May 9, 2022.
“Compared to May 9, today’s closing was the record low,” said Sugandha Sachdeva, vice-president – Commodity and Currency Research, Religare Broking Ltd. A slew of factors had conspired to push the domestic currency on a downward trajectory, she added.
Elevated crude prices, global uncertainty amid the war in Ukraine, mounting inflation and prospects of an aggressive monetary tightening path by the U.S. Fed have been major headwinds for the domestic currency.
“Additionally, the relentless foreign fund outflows from equities and the greenback climbing to a two-decade high have also been the key catalysts behind the recent slump in the rupee-dollar exchange rate,” she said.
“Risk sentiments have soured as market participants are fretting that an accelerated pace of rate hikes would derail global economic growth. However, likely RBI intervention to stem the fall in the rupee led the local unit to erase some of the losses,” she added.
Considering the backdrop, the Indian rupee is expected to trade in a range of 76.80-78.50 in the near-to-medium term, she said.
The equity markers also witnessed a sell-off on Thursday for the fourth consecutive day, led by banking and finance stocks. The S&P BSE Sensex plunged 1,158 points. or 2.14%. to 52,930.31. Stocks that slid the mos in the Sensex pack include IndusInd Bank (5.82%), Tata Steel (4.13%), Bajaj Finance (3.76%), Bajaj Finserv (3.53%), Axis Bank (3.44%) and HDFC Bank (3.34%).
The NSE Nifty too plunged 359.10 points, or 2.22%, to 15,808.
