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Indian rupee settles at its all-time low on Thursday at 78.32 against the US dollar at the interbank forex market on the back of a strong greenback and consistent foreign funds outflows offsetting the impact of gains from domestic equities. As long as crude oil prices stay above $95 per barrel, the rupee is expected to be vulnerable.
At the exchange market, the rupee opened at 78.26 per dollar and the weakening continued till it closed at an all-time low of 78.32 per dollar muted from its previous close.
On the previous day, the rupee settled at an all-time low level of 78.32 per dollar declining by 19 paise.
Jateen Trivedi, VP Research Analyst at LKP Securities said, "Rupee traded in a range between 78.20-78.40 ended near 78.30 as the dollar traded neutral along with capital market range bound volatile day kept range-bound moves."
Sensex settled at 52,265.72 higher by 443.19 points or 0.86%. Nifty 50 finished at 15,556.65 up by 143.35 points or 0.93%.
So far this month, up to June 23, FPI outflows stood at ₹43,831 crore in the equities market - the highest selloff by overseas investors so far in 2022. Overall, in the year, FPI outflows are to the tune of ₹2,10,986 crore in the equities.
"Rupee weakness can continue till the time Crude stays above $95, any breach below $95 and lower level sustained on Crude shall provide strong support to the rupee," Trivedi said.
Today, crude oil prices retreated as investors re-observed the risk of recessions and fuel demand outlook amidst rising interest rates scenario. However, crude oil prices remained above $100 per barrel levels.
As per a Reuters report, Brent crude futures fell by $1.47, or 1.3%, to $110.27 by 0949 GMT, having dropped as low as $108.04 earlier in the session. U.S. West Texas Intermediate (WTI) crude futures were down $1.48, or 1.4%, at $104.71 after touching a session low of $102.32.
According to VP Research Analyst at LKP Securities, the rupee range can be seen between 77.75-78.50 price can show volatile movements between the said range.
ICICI Direct in its research note earlier today said, "the rupee may be supported by falling crude oil prices. However, investors will closely watch US initial jobless claims data as it is expected to fall from 229,000 to 227,000."
US Federal Reserve Chair Jerome Powell has stated that higher rates are painful but are the means the central bank has to slow inflation. He also said that the Fed is not trying to engineer a recession to heel inflation but is fully committed to bringing prices under control even if doing so risks an economic downturn.