Rupee falls 9 paise to close at 82.88 against US dollar on forex outflows

The rupee depreciated by 9 paise to settle at 82.88 against the US dollar on Wednesday, as intense selling pressure in domestic equities and a strong greenback overseas dented the sentiment.

However, a sharp decline in crude oil prices in the international market restricted the rupee's fall, forex traders said.

At the interbank foreign exchange market, the rupee opened flat at 82.79, and it moved in a tight range of 82.89 to 82.79 during the session.

It finally closed at 82.88 against the US dollar, registering a fall of 9 paise over its previous close of 82.79.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.12 per cent higher at 104.23 ahead of the release of the Federal Open Market Committee meeting minutes later in the day.

Bond yields in the US have shot higher this month on anticipation of a firmer action by the Federal Reserve in its efforts to stamp out inflation.

Jateen Trivedi, VP Research Analyst at LKP Securities said, "Rupee traded weak below 82.85 amid increasing bond prices in the US which have spiked above November 2022 rates. Keeping the hawkish view on rate hikes the participants keep increasing positions in safer dollars against risky assets.

"Rupee weakness can be seen further below if RBI avoids intervention near 83.00." According to the minutes of the RBI Monetary Policy Committee meeting released on Wednesday, the majority of members of the high-powered panel were concerned about heightened inflation even as two panellists raised objections against an increase in the benchmark interest rate.

"The fight against inflation is complicated by the global outlook. There is some consensus growing around a milder slowdown than earlier feared, although geographical disparities complicate the prognosis. Be that as it may, the outlook for global inflation is turning more uncertain than before," Patra opined as per minutes of the Monetary Policy Committee (MPC).

Reserve Bank Governor Shaktikanta Das, who heads the six-member MPC, also said overall, there is considerable uncertainty at this stage on the evolving inflation trajectory due to ongoing geopolitical tensions, global financial market volatility, rising non-oil commodity prices, volatile crude oil prices and also weather-related events.

Global oil benchmark Brent crude futures declined 1.48 per cent to USD 81.82 per barrel.

The 30-share BSE Sensex crashed 927.74 points or 1.53 per cent to close at 59,744.98, while the broader NSE Nifty declined 272.40 points or 1.53 per cent to 17,554.30.

Foreign Institutional Investors (FIIs) emerged as net sellers in the capital markets on Wednesday as they sold shares worth Rs 579.82 crore, according to exchange data.

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