The rupee decreased 30 paise to 77.55 against the U.S. dollar in opening trade on Thursday as a dark trend in the domestic equity markets and a solid American currency weighed on investor sentiment. Apart from, persistent foreign fund outflows and raised crude oil prices impacted the domestic unit, Forex traders said.
The dollar index, which measures the greenback’s strength against a basket of six currencies, was trading 0.10% higher at 103.95. At the inter-bank foreign exchange, the rupee opened sharply lower at 77.52 against the American dollar, then lost further ground to price at 77.55, recording a fall of 30 paise from the previous closure.
International oil benchmark Brent crude futures decreased 1.11% to USD 106.32 per barrel. The Reserve Bank is likely to increase inflation projections in the Monetary Policy Committee (MPC) meeting in June and would also consider a rate hike to domestic inflation which is above its comfort level.
According to sources, tightening of policy rates by major central banks, including the RBI, would unfavorably impact demand in the next 6-8 months and delay the recovery process. Apart from the Reserve Bank of India (RBI), several central banks including the U.S. Federal Reserve and Bank of England have increased their benchmark lending rates to control in inflation, which has been increased by the Russia-Ukraine conflict.