Rupee Plummets 104 Paise To Settle At 73.47 Against Dollar Amid Biggest Crash In Domestic Markets In 11 Months

2021-02-26 10:43:55

Rupee Dives 104 Paise To Close At 73.47 Against Dollar Amid Weak Domestic Equities

The rupee plunged as much as 104 paise against the US dollar on Friday, February 26, to settle at 73.47 (provisional), tracking a heavy selloff in domestic equities and stronger American currency in the overseas market. At the interbank foreign exchange market, the domestic unit opened at 72.43 against the dollar, then lost further ground to register an intra-day low of 73.51. In an early trade session, the local unit declined 67 paise to 73.10 against the greenback. The rupee finally closed at 73.47 against the American currency, registering a massive decline of 104 paise over its previous close.

The dollar index, which gauges the greenback’s strength against a basket of six currencies, climbed 0.43 per cent to 90.52. On Thursday, February 25, the domestic unit had settled lower at 72.43 against the dollar, due to rise in global crude oil prices. The rupee witnessed a volatile session throughout the week. On Wednesday, the rupee gained to 72.35 against the greenback amid positive domestic equities. On Tuesday, it gained marginally to 72.46 tracking muted domestic equities.

“US bond yields have surged on worries about inflationary pressures due to unprecedented liquidity infusion in the system and a series of economic data, which is indicating that the economy is on the path to normalcy. This has in-turn led to a rebound in the dollar index and prompted a selloff in risk assets.

“We think that the rupee could see some more depreciation till the 73.50 mark, as the narrowing interest rate differential between India and US could prompt some outflows from the Indian bond and equity market,” said Sugandha Sachdeva VP-Metals, Energy & Currency Research, Religare Broking.

”However, it is too early to term this as a weakening bias for the domestic currency, and unless it sustains levels below 73.50 comfortably, the scope for appreciation remains”, she added.

On the domestic equity market front, the BSE Sensex ended 1939.32 points or 3.80 per cent lower at 49,099.99, while the broader NSE Nifty plunged 568.20 points or 3.76 per cent to 14,529.15. Domestic markets registered the biggest crash in 11 months.

According to exchange data, the foreign institutional investors were net buyers in the capital market as they purchased shares worth Rs 188.08 crore on February 25. Meanwhile, Brent crude futures, the global oil benchmark, fell 0.99 per cent to $ 66.22 per barrel.

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