Mumbai: The rupee slumped further by 24 paise to close at over nine-week low of 75.60 against the US currency Monday in line with deep losses in the stock markets and a stronger dollar as investors rushed for safe-haven assets amid geopolitical tensions. Forex traders said a lacklustre trend in domestic equities and elevated crude oil prices weighed on the local unit.
Moreover, official data released after market hours showed that retail inflation rose to 6.01 per cent in January on an annual basis and breached the RBI’s upper tolerance level, mainly due to higher prices of certain food items.
At the interbank foreign exchange, the rupee opened at 75.53 against the American dollar, and later witnessed an intra-day high of 75.37 and a low of 75.64 against the greenback.
The local unit finally ended the day at 75.60, the lowest closing level since December 20 and a fifth consecutive session of loss. In the five sessions, the rupee has declined 68 paise.
Friday, the rupee had plunged by 21 paise to a nearly seven-week low of 75.36 against the US currency on forex outflows and a strong dollar after a spike in inflation in the US boosted expectations of an aggressive rate hike by the Federal Reserve.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.13 per cent higher at 96.21.
“The rupee depreciated for the fifth day in a row following a plunge in domestic equities and stronger dollar index,” Dilip Parmar, Research Analyst, HDFC Securities said.
The local currency was the worst performing currency among Asian currencies, ahead of retail inflation data, Parmar said. He added that stocks fell as geopolitical risks over Ukraine rippled through global markets.
“The Indian Rupee depreciated against the US Dollar amid geopolitical tensions in Eastern Europe. The Rupee also came under pressure as crude oil prices surged Monday and a rise in oil prices also threatens to add to inflationary pressures on India and widen trade deficits,” said Sriram Iyer, Senior Research Analyst at Reliance Securities.
Asian equities and currencies also came under pressure this Monday and weighed on the local unit, Iyer said. He added that the Indian government bond yields fell Monday as traders awaited domestic headline inflation data.