NEW DELHI: The rupee opened on a weak note versus the US dollar as a global wave of risk aversion amid rising COVID cases in China and fears of aggressive Fed rate hikes sent investors rushing to the safety of the greenback.
The partially convertible rupee opened at 76.7940/$1 as against 76.5800/$1 at previous close. The Indian currency was last at 76.6440.
The US dollar climbed to its highest levels globally since March 2020 on Wednesday, with the dollar index last at 102.35.
The dollar index, which measures the US currency against six major rival currencies, has strengthened around 7 per cent so far in 2022 as the prospect of higher interest rates in the world’s largest economy has lured investors.
With inflation running at 40-year highs in the US, the Fed is widely expected to raise rates sharply.
Emerging market currencies such as the rupee have suffered as a result, with foreign institutional investors pulling out a massive Rs 1.3 lakh crores worth of funds from Indian equities so far in 2022, NSDL data showed.
Overseas investors have also net sold Rs 6,156 worth of Indian debt assets so far in the calendar year.
The rupee has depreciated around 3 per cent versus the dollar over the same period.
A rise in global crude oil prices also weighed on sentiment for the rupee as concerns about a higher trade deficit and inflation deepened, given India’s large dependence on crude imports.
Brent crude futures rose $1.11, or 1.1 per cent, to $106.10 a barrel. US West Texas Intermediate crude futures rose 84 cents, or 0.8 per cent, to $102.54 a barrel.
Dealers, however, expect the RBI to step in with its large foreign exchange reserves in order to prevent excessive volatility in the exchange rate.
Month-end dollar sales by exporters could also cushion the rupee, dealers said.
“...Higher DXY (dollar index) amid talks of aggressive rate hikes by the US Fed and uncertain global factors could keep the rupee in jitters. However, month-end dollar selling could revive some stress on the rupee,” Angel One’s Research Analyst, Currency, Heena Naik said.
Source Name:-Economic Times