Rupee plunges 84 paise to record low of 77.01 against US dollar amid Ukraine crisis

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The rupee tumbled 84 paise to close at its all-time low of 77.01 (provisional) against the US dollar on March 7, as heightened geopolitical risks due to the Russia-Ukraine conflict pushed investors into safe-haven assets. .

Forex traders said rising tensions between Russia and Ukraine kept crude prices elevated and raised concerns about domestic inflation and wider trade deficits.

Sustained outflows of foreign funds and a lackluster trend in domestic equities also weighed on investor sentiment.

In the interbank foreign exchange market, the rupee opened at 76.85 against the US currency, but lost ground and settled at a record low of 77.01, down 84 paise from the previous close.

On Friday, the rupee fell 23 paise to close at 76.17, its lowest closing level since December 15, 2021.

“The Indian Rupee has tumbled to a record low against the US dollar as the deepening conflict between Russia and Ukraine has sapped risk appetite in the market and triggered safe-haven flows into the US dollar,” it said. Sugandha Sachdeva, Vice President of Commodities and Foreign Exchange. Research, Religare Broking Ltd.

In addition, the parabolic rise in crude oil prices towards multi-year highs and spiraling commodity prices are fueling inflation risks, which is a key headwind for the rupee/dollar exchange rate, Sachdeva added.

According to Mr. Sachdeva, the overall trend for the Indian Rupee is skewed to the downside and “a convincing close below the 77 mark would pave the way for a further drop towards the 77.50 mark in the short term, while we expect the local currency to test the 79 mark from a medium-term perspective.” Meanwhile, the dollar index, which measures the greenback’s strength against a basket of six currencies, traded 0.46% higher at 99 .09.

Futures for Brent crude, the global benchmark for oil, rose 6.55% to $125.85 a barrel.

On the domestic stock market front, the 30-share Sensex finished 1,491.06 points or 2.74% lower at 52,842.75, while the broader NSE Nifty slumped 382.20 points or 2.35. % to 15,863.15.

Overseas institutional investors remained net sellers in the capital market on Friday as they dumped Rs 7,631.02 crore worth of shares, according to stock exchange data.

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