The partially convertible rupee opened at 76.2700/$1 as against 76.2575/$1 at previous close. The Indian currency, which was last at 76.3450/$1, moved in a band of 76.2550-76.3450/$1 so far in the day.
The US dollar index, which measures the greenback against six major rival currencies, was last at 100.90 versus 100.81 at previous close.
Recent comments by US Fed officials have strengthened speculation of the central bank hiking rates by a greater quantum than earlier expected in order to tame runaway inflation in the country.
Following a 25-basis-point rate hike in March, the Fed is now widely expected to lift rates by 50 bps at its next meeting in May.
Higher interest rates in the world’s largest economy erode the appeal of assets in riskier emerging markets such as India.
Moreover, the recent surge in US bond yields – also a consequence of aggressive Fed rate hike expectations – has led to weakness in equity markets globally as investors consider higher returns from fixed-income instruments.
Overseas investors have pared down exposure to Indian equities by more than Rs 1 lakh crore so far in 2022.
Currency traders said, however, that likely interventions by the RBI in the form of dollar sales had reined in the rupee’s weakness.
Over the last few weeks, the RBI has heavily sold dollars from its reserves in order to protect the rupee from excessive volatility.
“USDINR opened at 76.31 and is likely to get support on any dips as dollar index moves higher to 101 levels, highest since March 2020,” Finrex Treasury Advisors Head of Treasury, Anil Kumar Bhansali said.
“With Brent again upbeat at $114/bl, rupee faces double whammy of higher US$ and Oil prices. For the day the range is likely to be 76.20 – 76.55.”
