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regular-article-logo Thursday, 18 April 2024

Rupee plunges below 76-mark on soaring crude amid Ukraine-Russia war

The domestic unit slid 23 paise to close at 76.17 against the dollar, the lowest closing since December 15, 2021

Our Special Correspondent Mumbai Published 05.03.22, 01:41 AM
Representational image.

Representational image. Shutterstock

The rupee on Friday fell below the 76-mark — hemmed in by the Ukraine crisis, leading to a flare-up in crude prices and greater outflows from foreign portfolio investors (FPIs).

The domestic unit slid 23 paise to close at 76.17 against the dollar, the lowest closing since December 15, 2021. The rupee fell below 76 for the first time this calender year.

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Analysts are not ruling out the possibility of the rupee even hitting 77-levels. During this week, the rupee fell 84 paise or 1.11 per cent, the second straight week of losses.

At the inter-bank forex market, the Indian currency opened weak at 76.06 against the greenback and fell to a day’s low of 76.22 after which it closed at 76.17 against the previous close of 75.94.

The war in Ukraine has pushed up the crude price to $120-level which has raised the outflow of dollar even as investors opt for the greenback as a safe haven asset.

Persistent FPI outflows from the domestic equity markets have only worsened matters. Market circles said the rupee crash was caused by Russian forces attacking the nuclear power plant in Ukraine, which led to a global sell-off in equities.

“It is rare to see geo-politics drive financial markets but that is exactly what is happening over the past two weeks. The extent of appreciation has been muted due to RBI intervention,” Anindya Banerjee, DVP, currency derivatives and interest rate derivatives, at Kotak Securities said.

The RBI has intervened in the markets by selling dollars since the Russian invasion. It is not clear if the RBI sold dollars during Friday’s trade .

“Recent market environment continues to favour a stronger dollar against rupee as there are high chances of the government missing its fiscal target following a surge in crude oil prices and a delay in diversification. Higher commodity prices could turn into imported inflation and the central bank will be forced to change its stance in coming months,” HDFC Securities analyst Dilip Parmar said.

Sensex dips

The Sensex tumbled 768.87 points after crashing almost 1215 points during intra-day trade. It settled at 54333.81 — a drop of 1.40 per cent after collapsing below the 54000 level to a day’s low of 53887.72. The broader Nifty fell 252.70 points to 16245.35.

Investor wealth tumbled more than Rs 5.59 lakh crore in three days when the Sensex fell 3.40 per cent.

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