The rupee slumped 30 paise to 77.55 against the US dollar in opening trade on Thursday as a lacklustre trend in the domestic equity markets and a firm American currency weighed on investor sentiment. Besides, persistent foreign fund outflows and elevated crude oil prices impacted the domestic unit, forex traders said.
At the interbank foreign exchange, the rupee opened sharply lower at 77.52 against the American dollar, then lost further ground to quote 77.55, registering a fall of 30 paise from the last close. In initial deals, the domestic currency was moving in a range of 77.50 and 77.57. In the previous session, the rupee had settled at 77.25 against the American currency.
The dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.10 per cent higher at 103.95. On the domestic equity market front, the 30-share Sensex was trading 822.94 points or 1.52 per cent lower at 53,265.45, while the broader NSE Nifty declined 239.30 points or 1.48 per cent to 15,927.80.
Global oil benchmark Brent crude futures declined 1.11 per cent to USD 106.32 per barrel. The Reserve Bank is likely to raise inflation projections in the Monetary Policy Committee (MPC) meeting next month and would also consider a rate hike to tame inflation which is above its comfort level, according to sources.
The MPC, headed by the RBI Governor, is scheduled to meet between June 6 and June 8. It has been mandated to keep retail inflation in the range of 2-6 per cent. American brokerage Morgan Stanley on Wednesday cut its India growth estimate by 30 basis points for 2022-23 and 2023-24 on global headwinds, and warned that macro stability indicators like inflation are set to "worsen" going ahead.
According to sources, tightening of policy rates by major central banks, including the RBI, would adversely impact demand in the next 6-8 months and slow down the recovery process. Besides the Reserve Bank of India (RBI), several central banks including the US Federal Reserve and Bank of England have hiked their benchmark lending rates to rein in inflation, which has been exacerbated by the Russia-Ukraine conflict.
Foreign institutional investors remained net sellers in the capital market on Wednesday as they offloaded shares worth Rs 3,609.35 crore, as per stock exchange data.(With PTI inputs)