The rupee ended 15 paise lower at 77.40 (temporary) on Thursday, breaking its two-day winning streak, following a risk-off trend amid growing concerns over global inflation.
Weak domestic equity, rising US dollar in overseas markets and relentless foreign fund outflows also weighed on the rupee, which fell to an all-time low of 77.63 against the US dollar, forex traders said.
In the interbank forex market, the rupee opened very low at 77.52 against the greenback and moved in the range of 77.36 to 77.63 in day trading. The rupee finally ended at 77.40, down 15 paise from the previous close. The rupee had settled at 77.25 against the US dollar on Wednesday.
On May 9, the domestic unit closed at a record low of 77.44 against the greenback.
Global equity markets have moved into a tailspin after the US Federal Reserve’s aggressive rate hike, which could hamper growth, boosted US retail inflation data expected for April, analysts said.
On the domestic equity market front, the BSE Sensex fell 1,158.08 points, or 2.14 percent, to 52,930.31, while the broader NSE Nifty fell 359.10 points, or 2.22 percent, to 15,808.
The dollar index, which measures the strength of the greenback against a basket of six currencies, rose 0.52 percent to 104.39.
Foreign institutional investors remained net sellers in the stock market on Wednesday as they offloaded shares worth Rs 3,609.35 crore, according to the stock exchange.
Brent crude futures, the global oil benchmark, fell 2.32 percent to USD 105.02 per barrel.
Consumer Price Index (CPI) and industrial output data are due to be released later in the day.
According to sources, the Reserve Bank may raise its inflation forecast at its Monetary Policy Committee (MPC) meeting next month and will also consider raising rates to control inflation, which is above its comfort level.
The MPC, headed by the RBI governor, is scheduled to meet between June 6 and 8 It has been made mandatory to keep the retail inflation within 2-6 percent
American brokerage Morgan Stanley on Wednesday cut its growth forecast for India by 30 basis points for 2022-23 and 2023-24, warning that macro stability indicators such as inflation are going to be “bad” going forward.
Policy rate tightening by major central banks, including the Reserve Bank, will adversely affect demand in the next 6-8 months and slow down the recovery process, according to sources.
In addition to the Reserve Bank of India (RBI), several central banks, including the US Federal Reserve and the Bank of England, have raised their benchmark lending rates to curb inflation, further exacerbated by the Russia-Ukraine conflict.
Read more: Rupee opens at 77.52 / বন vs. Wednesday closes 77.24 /