Updated: June 29, 2022 6:35:55 am
The rupee plunged to a fresh intra-day low of 78.84 against the US dollar before closing at a record low of 78.77 as capital outflows and global risk aversion kept the investors on their toes even as selling in the emerging markets intensified.
The domestic currency nosedived to a fresh low of 78.84 during the day as against the previous day’s close of 78.34. Oil importers were also seen at the dollar buying side on the back of month-end flows. The elevated crude price further dented the sentiment for the Indian rupee.
“There seems to be relentless demand from offshore market and also from carry traders looking to unwind their shorts in dollar-rupee. In the morning expiry related buying pushed the pair higher,” said Anindya Banerjee, Vice President, Kotak Securities Ltd. Oil prices are gaining traction again due to the supply crunch as OPEC members. Libya and Ecuador are suspending oil output amid political unrest. Besides, all eyes are on the G7 meeting for further cues as the member nations are contemplating a new set of sanctions, including a proposal to place a price cap on imports of Russian oil. High demand from the US and relaxation of restrictions in China could further fuel oil prices on the higher incline and act as a major headwind for the domestic currency, said Sugandha Sachdeva, Vice President, Religare Broking Ltd.
The benchmark Sensex gained 16 points at 53,177.45 and the NSE Nifty index rose 18 points to 15,850.20. While the US is expected to raise rates by 75 basis points, the ECB is about to join the league at its July meeting. Tightening financial conditions and elevated inflation are triggering nebulous worries of a global growth slowdown, while favouring the safe-haven dollar index. However, the RBI is likely to keep using its forex reserves to curb excess volatility in the Indian rupee, which will provide some cushion to the domestic currency.
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