Indian rupee weakened to a fresh all-time low against U.S. dollar ahead of the release of U.S. inflation data, which is seen influencing the pace of future rate hikes by the Federal Reserve. Constantly raised crude oil prices also hurt sentiment for the domestic currency, with market participants fearing a fresh time of FII outflows, given the critical outlook on India’s inflation and current account.
The rupee depreciated 8 paise to a record low of 77.82 against the U.S. dollar in opening trade on Friday, tracking the strength of the greenback in the overseas market. At the inter-bank foreign exchange, the rupee opened on a weak note at 77.81 against the U.S. dollar, then lost ground to price at 77.82 -its all-time low level.
On Thursday, the rupee fallen by 6 paise to close at 77.74 against the U.S. dollar. The rupee opened weaker against the dollar this Friday tracking the overnight strength of the greenback, said, Sriram Iyer, Senior Research Analyst at Reliance Securities.
After hiking rates by a total of 75 bps so far in 2022, the Fed is seen lifting rates by 50 bps each in June and July. On Thursday, the European Central Bank too outlined plans to start tightening monetary policy in the coming months in order to tackle record high inflation in the Eurozone.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.04% lower at 103.17. Brent crude futures for August was down $1.01, or 0.8 per cent, at $122.06 a barrel. U.S. West Texas Intermediate crude for July fell 98 cents, or 0.8 per cent, to $120.53 a barrel.
