Rupee Weakens to 96.75 Against US Dollar Despite RBI Hike
By ThePip Desk
Indian rupee falls to 96.75 against the US dollar as surging crude oil prices and foreign capital outflows overshadow the RBI’s 25-bps rate hike.
Market Session Overview
The Indian rupee weakened against the US dollar, settling at 96.75 on a provisional basis during the Wednesday trading session. This marked a depreciation of 40 paise compared to its previous close of 96.35 on Tuesday. Throughout the session, the domestic currency touched a high of 96.34 and dropped to a low of 96.84 against the greenback.
Key Market Drivers
- Reserve Bank of India implemented a 25-basis point interest rate hike.
- Brent crude oil prices surged past $101 a barrel amid escalating West Asian tensions.
- Foreign institutional investors offloaded securities worth Rs 2,961.30 crore on Tuesday.
Global pressures heavily weighed on the domestic currency during the session as rebounding global crude oil prices and bond yields dampened overall investor sentiment. Brent crude oil prices surged past $101 a barrel as geopolitical tensions escalated in West Asia. Persistent capital outflows from foreign institutional investors further weighed on the domestic currency.
Foreign Institutional Activity
Foreign institutional investors acted as net sellers during Tuesday’s trading session. Market participants offloaded securities worth Rs 2,961.30 crore. These continuous capital outflows created substantial selling pressure on the domestic currency unit.
Global Currency Pressures
International currency pairs experienced similar downward trends during the session. The British pound weakened against the US dollar on Wednesday. This foreign exchange movement occurred as surging crude oil prices heightened broader inflation concerns across global markets.