Mumbai, May 22 (PTI) The Indian rupee slipped 34 paise to close at 75.95 against the US dollar on Friday as Reserve Bank's fresh measures to alleviate economic distress failed to strike a chord with investors.
Forex market sentiment also remained subdued due to weak domestic equities, rising coronavirus cases in the country and fresh US-China trade tensions.
The rupee opened weak at 75.72 at the interbank forex market and fell further as the day progressed and finally settled at 75.95, down 34 paise over its last close.
It had settled at 75.61 against the US dollar on Thursday.
During the trading session, it touched an intra-day high of 75.71 and a low of 75.95.
On a weekly basis, the domestic unit has depreciated by 37 paise. It had settled at 75.58 on May 15.
The Reserve Bank of India (RBI) on Friday slashed interest rates, extended moratorium on loan repayments and allowed banks to lend more to corporates in an effort to support the economy which is likely to contract for the first time in over four decades.
'RBI's rate cut move couldn't cheer forex traders. The 40 bps repo rate cut move was in line with market expectations, but it didn't provide full-fledged restructuring of loans and also didn't give the FY21 GDP (outlook) figure,' said Rahul Gupta, Head of Research- Currency, Emkay Global Financial Services.
Gupta further said that 'the RBI will have to take sector-specific measures to bring in this transmission'.
Going ahead, the investors’ focus will be on KKR and Reliance Industries' Jio related inflows of nearly USD 1 bln and foreign institutional investor (FII) participation in Reliance Industries Limited (RIL) rights issue, he noted.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, rose by 0.35 per cent to 99.72.
'Safe haven demand for dollar picked up amid escalation of US-China trade tensions following China’s announcement that it is in the midst of enacting a new security law in Hong Kong,' said Devarsh Vakil, Head Advisory, HDFC securities.
China on Friday introduced the draft of a controversial national security law in Hong Kong in its parliament to tighten Beijing's control over the former British colony.
The draft bill on establishing and improving the legal system and enforcement mechanisms for the Hong Kong Special Administrative Region (HKSAR) to safeguard national security was submitted to the National People's Congress (NPC) which began its week-long session in Beijing.
On Reserve Bank's support measures, Vakil said 'market read the announcement as negative and dragged rupee lower as RBI said the economy to contract in current fiscal and doubt about faster recovery in demand'.
Gaurang Somaiyaa, Forex & Bullion Analyst, Motilal Oswal Financial Services, said 'the RBI governor in his statement also mentioned that growth in 2021 is expected to remain in the negative territory with some pick-up in growth impulses being seen in H2 2021 onwards. We expect the rupee to come under pressure in the next few sessions and could quote in the range of 75.40 and 76.50'.
On the domestic equity market front, the 30-share index ended 260.31 points or 0.84 per cent lower at 30,672.59. The broader NSE Nifty too settled 67 points or 0.74 per cent down at 9,039.25.
Globally, over 51.21 lakh people have been infected by the virus and over 3.33 lakh have died.
In India, the death toll due to COVID-19 rose to 3,583 and the number of cases climbed to over 1.18 lakh, according to the health ministry.
Brent crude futures, the global oil benchmark, fell 5.10 per cent to USD 34.22 per barrel.
The Financial Benchmark India Private Ltd (FBIL) set the reference rate for the rupee/dollar at 75.7785 and for rupee/euro at 83.0376. The reference rate for rupee/British pound was fixed at 92.3831 and for rupee/100 Japanese yen at 70.34. PTI DRR MKJ