Rupee near all-time lows of 77 per dollar, after a record weak close of 76.93The rupee recouped slightly to 76.73 against the dollar on Tuesday after having slumped toa record weak close of 76.93 on Monday, as crude oil prices climbed to multi-year highs driven by the Russia-Ukraine crisis.The Press Trust of India reported, the rupee opened on a weak note at 77.02 against the US dollar, then pared its initial losses and touched 76.73, registering a gain of 20 paise from the previous close.According to Bloomberg,the rupee was trading at 76.8825 per dollar, while Reuters quoted it at 76.82 per dollar.On Monday,the rupee tanked nearly 1 per cent to close at a record low of 76.93, sliding for the fourth straight session,according to a Press Trust of India (PTI) report.During Monday's trade, the energy-sensitive currency breached 77 per dollar for the first time ever."The Indian rupee has plummeted to a lifetime low against the US dollar as the deepening Russia-Ukraine conflict has sapped risk appetite in the market while prompting safe-haven flows into the US dollar," Sugandha Sachdeva, Vice President for Commodity and Currency Research at Religare Broking, told PTI.Besides, the parabolic rise in crude oil prices towards multi-year highs and spiralling commodity prices are fuelling inflationary risks, a key headwind for the rupee-dollar exchange rate, Mr Sachdev added.Both the US crude and the global oil benchmark Brent soared to highs seen just before the 2008 financial crisis as the United States and Europe kept open the option of banning supplies from Russia, which provides about 10 per cent of world oil supply.As Ukraine peace talks made little headway, the prospect of that ban on oil imports from Russia has triggered investor fears over inflation and slowing economic growth."Global risk sentiment started the week deeply negative, before improving as European leaders indicated they would resist sanctions on Russian energy exports, preferring instead a determined strategy to reduce dependency on Russian imports," ANZ analysts wrote in a note."Markets are volatile, however, and highly sensitive to shifts in tone.
The progressive rise in breakeven inflation rates is evidence of mounting inflation concerns as commodity prices remain firmly underpinned," they added.While oil prices have gyrated since hitting 14-year highs, Russia has warned that prices could surge to $300 a barrel, and it might close the main gas pipeline to Germany if the West halts oil imports over the invasion of Ukraine.According to Religare Broking's Mr Sachdeva, the overall trend for the Indian rupee is skewed towards the downside, and a convincing close below 77 "would pave the way for further downside towards 77.50 mark in the near term, while we envisage the local currency to test the 79 mark from a medium-term perspective." Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.46 per cent higher at 99.09.Sustained foreign fund outflows and mayhem in domestic equities have also weighed on the rupee.Sensex fell over 100 points andthe Nifty traded below 15,850 early on Tuesday.According to stock exchange data, foreign institutional investors remained net sellers in the capital market on Friday as they offloaded shares worth Rs 7,631.02 crore."As expected, the rupee has hit an all-time low level.
The fall in currency indicates that the current crude prices may not fall in a hurry; we may witness elevated prices for some time to come," Nish Bhatt, founder and CEO of investment consulting firm Millwood Kane International, told PTI.