Updated: November 27, 2021 4:37:42 am
The rupee Friday plunged 37 paise to 74.89 against the dollar as a massive sell-off in equities, amid worries over a new variant of Covid and capital outflows, hit the forex market sentiment.
The dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.34 per cent down at 96.44. If capital outflows continue, the rupee is expected to hit the 75 mark.
“It’s the broad-based strength witnessed in the dollar index and the steep sell-off seen in domestic equities that has dragged down the local unit to three-week lows,” said Sugandha Sachdeva, VP- Commodity & Currency Research, Religare Broking.
The US dollar has been on a strong run scaling to its highest levels for the year as markets are anticipating that the US Fed will accelerate asset tapering and hike interest rates around mid-2022, with inflation running at levels not seen in decades. Besides, concerns about the new highly-mutated coronavirus variant and lockdown fears in Europe are weighing on the sentiment.
The dollar rose around one per cent this week mainly taking cues from weak market sentiments and FPI outflows especially after the news of detection of a new variant, said an analyst with Emkay Global Financial Services. Meanwhile, gold prices surged, tracking a global rally in the precious metal as concerns over a new Covid variant boosted the metal’s safe-haven appeal.
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