The rupee on Thursday closed 2 paise lower at 77.57 (provisional) against the US dollar as crude oil prices and frequent foreign capital outflows weighed on investor sentiment.
However, gains in domestic equities and a weak US currency in the overseas market restricted the rupee’s fall, traders said.
At the interbank forex market, the rupee opened at 77.54 against the greenback and touched an intra-day low of 77.65 and a high of 77.52.
It finally closed at 77.57, down 2 paise from its previous close of 77.57.
“In line with other regional currencies, the Indian rupee, especially the Chinese yuan, depreciated against the US dollar on weak growth and fresh hopes from central banks. Dilip Parmar, Research Analyst, HDFC Securities, said dollar demand and higher crude oil prices at the end of the month also weighed on the local units.
He said inflation remains the most-watched driver for investors, while markets have moved from fears of extreme inflation to growth fears amid the Russia-Ukraine war, Fed tightening and Chinese zero-Covid policy.
“The spot USD/INR is expected to trade between 77.30 to 77.75 before the May settlement,” he added.
The dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.23 per cent lower at 101.83.
Global oil benchmark Brent crude futures rose 0.81 per cent to $114.95 per barrel.
The 30-share BSE Sensex closed 503.27 points or 0.94 per cent higher at 54,252.53, while the broader NSE nifty It rose 144.35 points, or 0.90 per cent, to 16,170.15.
Foreign institutional investors remained net sellers in the capital markets on Wednesday as they offloaded shares worth Rs 1,803.06 crore, according to stock exchange data.
Moody’s Investors Service on Thursday lowered India’s economic growth forecast for 2022 from 9.1 per cent to 8.8 per cent, citing high inflation.
In its update to the Global Macro Outlook 2022-23, Moody’s said that high-frequency data shows that growth momentum from December quarter 2021 continued in the first four months this year.
However, the rise in crude oil, food and fertilizer prices will have an impact on domestic finances and spending in the coming months. An increase in rates to prevent further normalization of energy and food inflation will slow down the pace of recovery in demand, it said.
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