The rupee declined 2 paise to close at 77.57 (provisional) against the US dollar on Thursday, as firm crude prices and relentless foreign capital outflows dented investor sentiment. However, a rally in domestic equities and a weak American currency in the overseas market restricted the rupee's fall, traders said.
At the interbank foreign exchange 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 settled at 77.57, down 2 paise over its previous close of 77.55.
"Indian rupee in line with other regional currencies, particularly the Chinese yuan, has depreciated against American Dollar on an expectation of weaker growth and hawkish central banks. Month-end dollar demand and higher crude oil prices also weighed on the local units," said Dilip Parmar, Research Analyst, HDFC Securities.
Inflation remains the most-watched driver for investors, while markets have moved on from peak inflation fears to growth fears amid the Russia-Ukraine war, Fed tightening and Chinese zero-Covid policy, he added.
"Spot USD/INR is expected to trade in the range of 77.30 to 77.75 ahead of the May month settlement," he noted.
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 USD 114.95 per barrel.
The 30-share BSE Sensex ended 503.27 points or 0.94 per cent higher at 54,252.53, while the broader NSE Nifty advanced 144.35 points or 0.90 per cent to 16,170.15.
Foreign institutional investors remained net sellers in the capital market on Wednesday, as they offloaded shares worth Rs 1,803.06 crore, as per stock exchange data.
Moody's Investors Service on Thursday slashed India's economic growth projection to 8.8 per cent for 2022 from 9.1 per cent earlier, citing high inflation.
In its update to Global Macro Outlook 2022-23, Moody's said high-frequency data suggest that the growth momentum from December quarter 2021 carried through into the first four months this year.
However, the rise in crude oil, food and fertiliser prices will weigh on household finances and spending in the months ahead. Rate hike to prevent energy and food inflation from becoming more generalised will slow the demand recovery's momentum, it said.
Source Name:-Economic Times