Amid inflation rise, the rupee plunges historic low of 77.53
The rupee sank to a record low as the dollar gained against major global currencies on the US Fed rate hike and the continuing sell-off in the Indian equity market. The rupee opened weaker at 77.04 to the dollar against the previous close of 76.9150 and touched an all-time low of 77.4050. If the rupee continues to weaken, it will add to inflation as imports become costlier, and it will also make overseas education and international travel more expensive.
Prashanth Tapse, Vice President (Research), Mehta Equities Ltd, said the recent rate hike by the US Fed has further intensified FII selling in the domestic market. They sold shares worth Rs.5,517.08 crores on Friday. The bellwether BSE Sensex is down about 610 points so far.
However, most of the large investors in the anchor round were domestic mutual funds. “Despite high crude prices due to rising import bills, the external situation is under control. With RBI holding around $600 billion in forex reserves and $65 billion in forwards, India is in a comfortable position,” said Ashhish Vaidya, head of treasury and markets at DBS Bank Ltd.
“The more-than-expected tightening by the US Fed and the continued Russia-Ukraine standoff are putting pressure on the rupee and the entire emerging market space,” Vaidya added.
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