Rupee declines by 18 paise to 73.30 on COVID concerns

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Mumbai, Apr 5 (PTI) The rupee declined by 18 paise to close at 73.30 against the US currency on Monday on strong dollar in global markets and risk aversion in the domestic market amid concerns over rising COVID-19 cases.

Losses in domestic equity markets also weighed on investors' sentiment.

'Indian rupee declined along with stocks as rising domestic virus cases dampened sentiments. The rupee is expected to remain under pressure as high frequency indicators are now coming off with no new reforms on card and current account slipping back to deficits,' said Dilip Parmar, Research Analyst, HDFC Securities.

While on the other hand the dollar index is likely to remain on an upward trajectory amid economic optimism supported by a rapid COVID-19 vaccine rollout and US President Joe Biden's USD 2.3 trillion infrastructure spending proposal, Parmar said.

The dollar index, which gauges the greenback's strength against a basket of six currencies, rose 0.05 per cent to 93.06.

At the interbank forex market, the local unit opened at 73.38 against the greenback and traded in the range of 73.28 to 73.45 during the day.

The rupee finally ended at 73.30 against the American currency, registering a fall of 18 paise over its previous closing of 73.12. The forex market was closed on Thursday and Friday. 'The Indian Rupee depreciated amid strong dollar and risk aversion in the domestic markets. Dollar is gaining strength amid a surge in US treasury yields and upbeat economic data,' said Saif Mukadam, Research Analyst, Sharekhan by BNP Paribas.

Further, the rupee may slip on concern over rising COVID-19 cases in India. India reported more than 1 lakh cases of coronavirus for the first time. The Maharashtra government announced new restrictions, including night curfews and weekend lockdowns.

'However, sharp fall was prevented on softening of crude oil prices. Rupee may trade in the range of 72.80 to 74.0 in next couple of sessions,' Mukadam added.

Brent crude futures, the global oil benchmark, was trading 2.05 per cent down at USD 63.53 per barrel.

On the domestic equity market front, the BSE Sensex ended 870.51 points or 1.74 per cent lower at 49,159.32, while the broader NSE Nifty declined by 229.55 points or 1.54 per cent to 14,637.80.

The weaker domestic macro and stronger US dollar continue to weigh on the rupee. India's manufacturing PMI for March came at 55.4, the lowest in seven months.

In terms of data and events, the focus is likely to remain on PMI services and the RBI policy review meeting this week.

'Rupee which had a stellar year primarily on the backdrop of strong inflows has run into rough weather, as rising infections threaten lockdown in several places. Sharp fall in equities today reflected this fear, but the inflation theme could check the volatility as MPC is set to announce its rate decision this week,' said Chief Market Strategist at Geojit Financial Services. PTI DRR MR