Rupee Drops to Rs 78.59 per dollar in early trade
This is true even though the dollar index, a measure of the performance of the dollar against a basket of six different currencies, was trading slightly lower on the day.
Advertisement
Following weakness in global stocks from Wall Street’s bad performance overnight and as oil prices recovered after last week’s collapse, the rupee sank to a new all-time intraday low of 78.59 per dollar on Tuesday after ending at record lows in each of the previous four trading sessions.
According to PTI, ongoing foreign cash outflows and concerns about an economic slowdown caused the rupee to open on a shaky note at 78.53 against the dollar before losing momentum to quote at 78.59, its all-time low level, recording a decrease of 22 paise from the previous day.
This is true even though the dollar index, a measure of the performance of the dollar against a basket of six different currencies, was trading slightly lower on the day.
Advertisement
The rupee dropped four paise in the previous session, reaching a record-low closing rate of 78.37 against the dollar.
The rupee is under pressure due to FIIs’ (Foreign Institutional Investors) persistent selling in domestic markets, according to Rahul Kalantri, Vice President for Commodities at Mehta Equities, who spoke to PTI.
Further economic sanctions on Russia, according to Kalantri, might push up oil costs globally and put pressure on developing market currencies. This week, Kalantri said, “the rupee will continue volatile and may cross levels of 78.55.”
The United Arab Emirates’ energy minister said that the country was producing near to its maximum capacity, contradicting hopes that it may help expand supply in a tight market. This contributed to an increase in oil prices of almost 1% in early Asian trading.
In fact, a spike in crude oil prices further undermined market confidence after last week’s fall. Today, Brent crude futures increased $1.08, or 0.9%, to $116.17 a barrel.
However, traders believe that if the rupee continues to fall during the afternoon, central bank dollar sales will support the local currency and limit its losses.
Indian equity indices experienced a drop during Tuesday’s opening sessions, capping a three-day winning streak amid muted signals from the global markets. Asian shares experienced a dip in early trade, following the turbulent Wall Street session overnight.