The rupee fell 8 paise to close at 73.42 against the US dollar on Wednesday, ending its four-day streak of gains amid risk aversion in global markets and soaring crude oil prices .
In the interbank forex market, the local unit opened lower at 73.51 against the greenback and traded in a range of 73.39 to 73.51 during the day. The rupee finally ended at 73.42 against the US dollar, falling 8 paise from its previous close of 73.34.
Meanwhile, the dollar index, which measures the strength of the greenback against a basket of six currencies, rose 0.14% to 90.26.
“The Indian rupee has depreciated due to risk aversion in global markets and soaring crude oil prices. Market sentiment is hurt as investors worry about growing inflationary pressure in the United States. United and escalating geopolitical tensions between Israelis and Palestinians, ”said Saif Mukadam, research analyst, Sharekhan by BNP Paribas.
In addition, the rupee has slipped on fears that rising COVID-19 cases in India and lockdown restrictions in some states will hurt economic recovery. Market participants remained cautious ahead of the US CPI data, Mukadam added.
However, a sharp drop was avoided due to the weak dollar and the expectation of improving macroeconomic data, he said.
Futures on Brent crude, the world’s benchmark for oil, were trading 0.55% at $ 68.93 per barrel.
On the national stock market front, the BSE Sensex ended down 471.01 points or 0.96% to 48,690.80, while the larger NSE Nifty index lost 154.25 points or 1. 04% to 14,696.50.
Foreign institutional investors (FIIs) remained net sellers in capital markets as they withdrew from Rs 336.00 crore on Tuesday, provisional data showed.
Meanwhile, India recorded a record 4,205 deaths from COVID-19 in one day, bringing the death toll to 2,54,197, while 3,48,421 new coronavirus infections were reported, data shows from the Union Health Ministry updates Wednesday.
“After four straight winning days, the rupee fell on a rebound in the dollar index and US Treasury yields ahead of US CPI data,” said Dilip Parmar, research analyst, HDFC Securities .
On the national data front, the most important release of the day will be the Indian CPI, Parmar said, adding that base effects and the lockdown / restriction will continue to skew the inflation figures year on year. the other while industrial production data for March will be better than the previous reading.
Sriram Iyer, senior research analyst at Reliance Securities, the rupee, along with other Asian currencies, have come under pressure, fearing that mounting inflationary pressure in the United States will prompt the Federal Reserve to cut its stimulus measures. .
“Traders gravitate towards the dollar as the market expects the US CPI to rise 3.6% in April, the largest increase in nearly a decade. If the inflation figure matches the market expectations, then betting on monetary tightening sooner than expected will push USDINR spot prices even higher, ”said Rahul Gupta, head of currency research, Emkay Global Financial Services.
Gupta further noted that if the US CPI is lower than expected, the dollar will continue to remain subdued with downward pressure on the spot USDINR.
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