Mumbai: The rupee on Monday slumped by 17 paise to close at a more than three-week low of 74.60 against the US dollar due to high crude oil prices, forex outflows and heavy losses in domestic equities amid growing geopolitical worries.
Forex traders said the strength of the American currency in the overseas market and weak appetite for riskier assets also dragged down the local unit.
Moreover, market participants are now eyeing the US Fed’s January 25-26 meeting for further cues.
“The Indian rupee has weakened amid the big crack witnessed in domestic equities in tandem with other Asian markets. The sentiments are quite fragile in the markets amid the geopolitical tensions in Eastern Europe and as investors are fretting over the possibility of a quicker pace of interest rate hikes in the US,” Sugandha Sachdeva, Vice President – Commodity and Currency Research, Religare Broking Ltd.
Riskier assets have come under pressure amid the prospects of a Russian invasion of Ukraine. The US and the UK have advised the families of their diplomats in Ukraine to leave the country.
At the interbank foreign exchange market, the local currency opened at 74.43 against the greenback and witnessed an intra-day high of 74.42 and a low of 74.69 during the session.
The rupee finally settled down by 17 paise or 0.23 per cent at 74.60, the lowest closing level since December 27, 2021.
The dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.12 per cent up at 95.75.
Brent crude futures, the global oil benchmark, rose 0.33 per cent to USD 88.18 per barrel.
With inflationary pressures building up, the overwhelming consensus suggests that the era of near-zero interest rates is likely to come to an end very soon, Sachdeva said, adding that the rupee is still finding some comfort from the fact that the country’s forex reserves have surged by USD 2.229 billion to USD 634.965 billion for the week ended January 14.
—PTI

Press Trust of India