The rupee fell even lower on Monday, closing at 77.44, after breaking the previous low of 77.05 earlier in the session, as the dollar’s rally sliced across markets.
According to PTI, the Indian currency fell 54 paise to a new record low of 77.44 versus the US dollar, down from 76.90.
The rupee opened down versus the greenback on the interbank foreign currency market, at 77.17, and fell to a lifetime low of 77.52 throughout the trading day.
The spike in the dollar was driven by flight-to-safety transactions, as investors remain concerned about rising inflation, higher interest rates, and slowing economic growth.
Higher Treasury yields on rising inflation and the US Federal Reserve’s predicted aggressive rate hike path propelled the dollar to its best levels in two decades.
A tightening lockdown in China, Europe’s decision to boycott Russian oil in retaliation to Russia’s three-month-old war in Ukraine, and slowing global growth threats from spiralling commodity prices have all strengthened the greenback’s safe-haven appeal.
Indeed, the dollar surpassed 104.19 against a basket of major currencies for the first time since July 2002, extending its over 9% gain this year.
The rupee’s depreciation has also been fueled by persistent capital outflows. After being net sellers of Indian stocks for seven months through April, foreign institutional investors (FIIs) pulled out about 6,400 crore in the first four trading sessions of May.
Brent futures were still trading above $110 a barrel on Monday, despite crude prices falling over 1%.
The spike in crude prices – which have mainly been above $100 since late February has taken a toll on the energy-sensitive rupee, as the country relies on imports for 85 percent of its oil needs.
Domestic equities slumped on Monday, continuing their poor performance and dragging on the rupee as the latest stock exchange data showed foreign institutional investors (FIIs) offloaded shares worth Rs 5,517.08 crore on Friday, with trends pointing to more of the same this week.