Rupee slumps 87 paise to close at 73.38 against US dollar

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Mumbai, Mar 30 (PTI) The rupee slumped by 87 paise to close at 73.38 (provisional) against the US currency on Tuesday as rising crude oil prices and a strong American currency weighed on investor sentiment.

At the interbank forex market, the local unit opened at 72.85 against the greenback and traded in the range of 72.77-73.47 during the day.

The rupee finally ended at 73.38 against the American currency, registering a fall of 87 paise over its previous closing.

On Friday, the rupee had settled at 72.51 against the American currency.

The forex market was closed on Monday on account of Holi.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, advanced 0.20 per cent to 93.12.

'Indian rupee depreciated amid strong dollar and rise in crude oil prices. Dollar gained strength amid surge in US treasury yields. Yields jumped on expectation that rollout of COVID-19 vaccines and government stimulus efforts will accelerate economic growth and inflation,' said Saif Mukadam, Research Analyst, Sharekhan by BNP Paribas.

Additionally, the rupee slipped on concern over rising COVID-19 cases in India. However, a sharp fall was prevented on rise in risk appetite in the domestic market. Rupee may trade in the range of 72.70 to 73.60 in next couple of sessions, Mukadam noted.

Brent crude futures, the global oil benchmark, were trading 0.69 per cent down at USD 64.53 per barrel.

On the domestic equity market front, the BSE Sensex ended 1,128.08 points or 2.30 per cent higher at 50,136.58, while the broader NSE Nifty advanced by 337.80 points or 2.33 per cent to 14,845.10.

Foreign institutional investors were net sellers in the capital market as they offloaded shares worth Rs 50.13 crore on Friday, according to exchange data.

'Rupee got a rough ride just a day before the financial year end, as it marked its biggest single-day fall since February 26. Dollar buying from importers and central bank along with short squeeze pushed USD/INR above 100 days moving averages,' said Dilip Parmar, Research Analyst, HDFC Securities.

The rupee was the worst-performing currency among Asian currencies.

'The sharp surge in dollar and US treasury yields also weighed on Indian rupee. Dollar index which is placed well above four and half month high while US treasury yields also trading at 1.77, surpassing previous recent high,' Parmar said.

According to Sriram Iyer, Senior Research Analyst at Reliance Securities the Indian Rupee depreciated against the US dollar this Tuesday as the greenback continued to strengthen along with hardening US bond yields.

Iyer further said that month-end importer demand and reduced fiscal year-end exporter dollar selling also weighed on the local currency on Tuesday.

Meanwhile, other Asian currencies were also down against the greenback and weighed on sentiments.

Additionally, worries over second wave of coronavirus infections in India have also weighed on risk appetite and kept investors away from the markets, Iyer noted.

The dollar index gained against major currencies on Tuesday in the afternoon session in Asia as accelerating US vaccinations and plans for a major stimulus package reinforced the idea that inflation will increase in the US and in turn push the treasury yields higher. PTI DRR DRR ANS ANS