On a weekly basis, the rupee depreciated 57 paise on a stronger dollar index, risk-off sentiment and outflows of foreign funds.
On a weekly basis, the rupee depreciated 57 paise on a stronger dollar index, risk-off sentiment and outflows of foreign funds.
The rupee pared initial gains, trading just 1 paisa higher at 77.49 (prelim) against the US dollar on Friday as inflation concerns and US currency strength weighed on the local unit.
Forex traders said the rupee had consolidated in a tight range as weakness in regional currencies and depressing economic data weighed on the domestic unit, while Reserve Bank of India (RBI) intervention limited losses.
In the interbank FX market, the rupee opened at 77.35 against the greenback and has ranged from 77.26 to 77.49 in intraday trading.
The rupee eventually closed at 77.49, just 1 paisa higher than the previous close.
On Thursday, the rupee plummeted 25 paise to close at a lifetime low of 77.50 against the US currency.
On a weekly basis, the rupee depreciated 57 paise on a stronger dollar index, risk-off sentiment and outflows of foreign funds.
“Among all the factors, the liquidity factor is inevitably a major contributor to recent market moves and market participants are rushing for safe-haven assets,” said Dilip Parmar, research analyst at HDFC Securities.
On Friday, risk appetite remained gloomy as the benchmark stock index erased morning gains and the rupee also weakened against the dollar, Parmar said, adding: “Weakness in regional currencies and depressing economic data are weighing on the local entity while RBI intervention limited losses.” Meanwhile, India’s headline inflation galloped for the seventh straight month, hitting an 8-year high of 7.79% in April on rising food and fuel prices, increasing the likelihood of an RBI rate hike early next month to tame prices.
With factory production, as measured by the Industrial Production Index (IIP), remaining subdued at 1.9% in March, some economists believe another rate hike after a 40 basis point hike last week could slow economic growth.
On the domestic stock market front, the BSE Sensex closed 136.69 points, or 0.26%, lower at 52,793.62, while the broader NSE Nifty fell 25.85 points, or 0.16%, to 15,782.15.
The dollar index, which measures the dollar’s strength against a basket of six currencies, fell 0.05% to 104.79.
