Rupee drops 10 paise to end at 75.56 per dollar

Mumbai, May 14 () The rupee slipped 10 paise to close at 75.56 against the US dollar on Thursday amid a strengthening greenback and weak domestic equities.

Forex traders said market participants were concerned about the fiscal deficit following the government's Rs 20 lakh crore economic stimulus package and lack of clarity on how it would be financed.

Foreign fund outflows and the Fed's grim prognosis for the US economy further weighed on the market here, traders added.

The local unit opened weak at 75.57, and shuttled between a low of 75.59 and a high of 75.30. It finally settled at 75.56 against the US dollar, down 10 paise over its previous close.

The rupee had finished at 75.46 against the greenback on Wednesday.

Domestic bourses wilted under selling pressure on Thursday, with the BSE benchmark Sensex falling 898.94 points to 31,109.67 and the broader NSE Nifty shedding 228.15 points to end at 9,155.40.

Foreign institutional investors were net sellers in the capital market, offloading equity shares worth Rs 283.43 crore on Wednesday, according to provisional exchange data.

In India, the death toll due to COVID-19 rose to 2,549 and the number of cases climbed to 78,003, according to the health ministry.

Meanwhile, the number of cases around the world linked to the disease has crossed over 43.60 lakh and the death toll has topped 2.97 lakh.

Forex traders said market participants are awaiting more clarity on the Rs 20 lakh crore economic stimulus package.

"Volatility for the currency has been confined to a range as market participants remain cautious on the announcement that is expected from the Finance Minister Nirmala Sitharaman in the next few sessions," said Gaurang Somaiyaa, Forex & Bullion Analyst, Motilal Oswal Financial Services.

Somaiyaa said "further clarity on the stimulus package announcement is likely to provide cues to the rupee. In the next couple of sessions, we expect the rupee (Spot) to quote in the range of 75.05 and 75.80."

According to Devarsh Vakil, Head Advisory, HDFC Securities, "risk-off mood dragged equities lower and dollar higher as market disappointed with first tranche of stimulus announcements."

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.24 per cent up at 100.48.

"The US dollar gained after Federal Reserve Chair Jerome Powell said the US economy faces unprecedented risks from the coronavirus if fiscal and monetary policy makers don't rise to the challenge. Powell pushed back against the notion of deploying negative rates," Vakil said.

Brent crude futures rose 3.49 per cent to USD 30.21 per barrel.

The Financial Benchmark India Private Ltd (FBIL) set the reference rate for the rupee/dollar at 75.3885 and for rupee/euro at 81.8222. The reference rate for rupee/British pound was fixed at 92.6153 and for rupee/100 Japanese yen at 70.37. DRR BAL ABM