Rupee slumps 76 paise, settles below 74 against US dollar

The Indian rupee continued its downward journey on Thursday, sliding another 76 paise to close below the 74 per US dollar level, tracking a strong greenback overseas after the US Federal Reserve surprised the market by signalling rate hike sooner than expected.

At the interbank forex market, the domestic unit opened weak at 73.65 against the American currency, then lost further ground and finally closed at 74.08, showing a fall of 76 paise over its previous close.

On Wednesday, the rupee had settled at 73.32.

The local unit witnessed an intra-day high of 73.57 and a low of 74.08 against the greenback.

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The domestic currency has lost 128 paise in the eight trading sessions to Thursday.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, rose 0.60 per cent to 91.67.

"Indian Rupee depreciated amid strong dollar. Further, risk aversion in the global markets and disappointing macroeconomic data added downside pressure," said Saif Mukadam, Research Analyst, Sharekhan by BNP Paribas.

"Dollar gained strength as US Federal Reserve surprised market by signalling rate hike sooner than expected. Their median projection showed central bank lifting their benchmark rate to 0.6 per cent from near zero by the end of 2023," Mukadam said.

On the domestic macroeconomic front, the CPI inflation accelerated by 6.3 per cent in May 2021, compared to 4.23 per cent in April 2021. Inflation breached Reserve bank of India's target range of 2-6 per cent.

"Further, market participants fear that the second wave of Covid-19 infection in India has dampened the expectation of quick economic recovery. Rupee may trade in the range of 73.25 to 74.15 in next couple of sessions," he added.

On the domestic equity market front, the BSE Sensex ended 178.65 points or 0.34 per cent lower at 52,323.33, while the broader NSE Nifty fell 76.15 points or 0.48 per cent to 15,691.40.

Brent crude futures, the global oil benchmark, rose 0.12 per cent to $74.48 per barrel.

Foreign institutional investors were net sellers in the capital market on Wednesday as they offloaded shares worth Rs 870.29 crore, as per exchange data.