The Indian rupee declined to its lowest in over six weeks on Thursday, depreciating by 97 paise against the U.S. dollar for the eighth straight day as the strong greenback and high oil prices put pressure on the battered Asian currency.
The USD/INR rose to an intraday high of 74.239 – hit its weakest since May 3 – against the U.S. currency from Wednesday’s close of 73.27. The rupee has lost nearly 178 paise so far this month and weakened 100 paise in the four trading sessions.
The dollar index, a measurement of the dollar’s value relative to six foreign currencies, rose 0.62% to 91.696. That was largely driven by the Fed’s dot plot released on Wednesday, which suggested an expectation of two rate hikes in 2023. The U.S. benchmark 10-year Treasury yield jumped 7.5 basis points.
Other than the FOMC monetary policy statement, retail sales and industrial production data would be critical for investors and a better-than-expected release could support the mighty greenback.
The benchmark equity indices also ended lower for the second consecutive day, closing down 178.65 points or 0.34% lower at 52,323.33, while the broader NSE Nifty fell 76.15 points or 0.48% to 15,691.40.
On the other hand, global oil benchmark Brent futures fell 0.78% to $73.83 per barrel. Foreign institutional investors were net sellers in the capital market on Wednesday as they offloaded shares worth Rs 870.29 crore, as per provisional data.
“Sentiments remained frail as the recent recovery in the U.S., the world’s largest economy, and upbeat inflation data raised hopes over a slightly hawkish approach and potential interest rate hike,” noted Manish Pargi, currency analyst at Angel Broking.
“Bets on the shift in the monetary stance by the U.S. Central Bank gave strengthen to the U.S. currency. Strong demand for the dollar by importers and banks amid soaring crude oil prices undermined the domestic currency.”