Trading beyond 77.40 per Dollar, Rupee weakens to all time low

New Delhi, May 09: The Rupee weakened and hit a fresh all time low on Monday, trading behind 77.40 per Dollar. This has been driven by investors' preference for safety as lockdowns in China, war on the edge of Europe and fear about higher interest rates sent a jolt across the market.

On Friday the Indian currency ended close to its all time lows of 77.05. Global oil benchmark Brent crude futures advanced 2.31 per cent to USD 113.46 per barrel.

The 30-share BSE Sensex plunged 866.65 points or 1.56 per cent to end at 54,835.58, while the broader NSE Nifty fell 271.40 points or 1.63 per cent to 16,411.25.

"Rupee had a sweltering time today as it plunged around a percentage point following risk-off moods and surge in crude oil prices," said Dilip Parmar, Research Analyst, HDFC Securities.

The dollar index, which gauges the greenback's strength against a basket of six currencies, touched a two-decade high of 104.06 before moderating to 103.29.

Foreign institutional investors were net sellers in the capital market on Friday, offloading shares worth Rs 5,517.08 crore, as per stock exchange data.

On a weekly basis, the rupee depreciated by 40 paise against the American currency.

"High oil prices, US Dollar Index at 20 year high, US 10 year yield above 3 per cent and weak equity markets, the list of negatives for Rupee is pretty long.

"However, we suspect aggressive intervention from the RBI is keeping USD-INR under 77," said Anindya Banerjee, VP, Currency Derivatives & Interest Rate Derivatives at Kotak Securities Ltd.

According to Gaurang Somaiya, Forex & Bullion Analyst, Motilal Oswal Financial Services, the rupee fell as the broad strength in the dollar continued to weigh on major crosses.

"Earlier in the week the rupee rose after the RBI decided to raise rates by 40 bps and hiked CRR by 50 bps. But losses for the currency were restricted after the Federal Reserve too raised rates and maintained a hawkish stance," Somaiya said.

Somaiya further said "we expect the USD-INR (Spot) to trade sideways with a positive bias and quote in the range of 76.40 and 77.20." "The Indian Rupee tumbled against the US Dollar on Friday and depreciated this week as risk appetite weakened amid mounting concerns about inflation that may trigger more aggressive rate hikes by the global central banks," said Sriram Iyer, Senior Research Analyst at Reliance Securities.

However, dollar sales by state-run banks, suspected on behalf of the central bank, capped further weakness, he added.

(With PTI inputs)