The rupee started on a weak note as crude prices rose more than $1 a barrel in early Asian trade on Wednesday on hopes of demand recovery in China, and persistent foreign fund outflows weighed on investor sentiment.
Brent crude futures were up $1.15 at $113.08 a barrel, while U.S. West Texas Intermediate (WTI) crude futures climbed over $1.5 to $114.02 a barrel, paring some losses after oil prices fell by around 2 per cent in the previous session.
PTI reported the rupee opened weak at 77.57 against the dollar, then gained some lost ground to 77.50, registering a fall of 6 paise over the last close of 77.44. It was moving in a tight range of 77.57 to 77.48 in early deals at the interbank foreign exchange.
Bloomberg quoted the partially-convertible rupee at 77.50.
While a higher opening in benchmark equities restricted the rupee’s fall, Federal Reserve Chairman Jerome Powell’s pledge that the central bank would ratchet up interest rates as high as needed to stifle a surge in inflation is likely to boost the greenback after the dollar fell to its lowest in nearly two weeks.
Despite the dollar’s broader decline in the previous session, the rupee hit fresh record intra-day lows on Tuesday, weakening to as low as 77.7975.
However, the currency recovered after the Reserve Bank of India intervened.
The rupee’s broad and deep sell-off started since Russia invaded Ukraine late in February, which resulted in a general foreign capital exodus from emerging markets as investors sought safe-haven assets.
In March, the rupee hit its first record low for the year, breaking below 76.9050 per dollar, which was last touched on April 22, 2020, amid the COVID-19 pandemic.
Reuters reported that the RBI sold $20.1 billion in March’s spot foreign exchange market to support the rupee against the dollar.
Over the last two weeks, the Indian currency has now been hitting multiple record lows on the back of broad strength in the dollar and severe risk aversion.