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At the interbank foreign exchange market, the rupee opened lower at 76.15 against the American currency, and slipped further to 76.26. It finally settled at 76.19, down 4 paise over its previous close of 76.15.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.13 per cent higher at 100.42.
“The US Dollar index broke above the USD 100 mark (a level that was last seen in May, 2020) post the CPI data release yesterday,” according to Emkay Global Financial Services.
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Global oil benchmark Brent crude futures rose 0.46 per cent to USD 105.12 per barrel.
On the geopolitical front, Russian President Vladimir Putin said peace talks with Ukraine had reached a dead end. Reports suggested that Russian oil and gas condensate production fell to 2020 lows, which triggered a strong bounce in Brent crude oil prices and in turn hurt the rupee, Emkay Global Financial Services said.
“Moving ahead, the Rupee needs to strengthen below 75.80 to see a re-test of 75.40 areas again, else the weakness will extend towards 76.45 levels,” it added.
The 30-share BSE Sensex ended 237.44 points or 0.41 per cent lower at 58,338.93, while the broader NSE Nifty fell 54.65 points or 0.31 per cent to 17,475.65.
On the domestic macroeconomic front, retail inflation soared to a 17-month high of 6.95 per cent in March, continuing to remain above the Reserve Bank’s upper tolerance level, while factory output grew just 1.7 per cent in February, as per official data.
Foreign institutional investors remained net sellers in the capital market on Tuesday as they offloaded shares worth Rs 3,128.39 crore, according to stock exchange data.
According to Gaurang Somaiya, Forex and Bullion Analyst, Motilal Oswal Financial Services, rupee consolidated in a narrow range after data showed retail inflation for March was at a 17-month high of 6.95 per cent, led by a broad-based increase in food and core inflation amid the ongoing Russia-Ukraine war.
“We expect the USD-INR (Spot) to trade sideways with a positive bias and quote in the range of 75.80 and 76.50,” he added.
On a weekly basis, the rupee has depreciated 24 paise against the greenback.
The forex market will remain closed on Thursday for Mahavir Jayanti and Dr Babasaheb Ambedkar Jayanti and on Friday on account of Good Friday.
“The Indian rupee edged lower as investors digested the mixed inflation picture from the US, wherein the inflation accelerated to 8.5 per cent (YoY) in March, the largest annual rise since December 1981.
“However, US monthly underlying inflation showed some signs of moderation, leading to hopes that the inflation pressures might have peaked in March and could lose some traction going forward,” said Sugandha Sachdeva, Vice President – Commodity and Currency Research, Religare Broking Ltd.
Even the domestic retail inflation has swelled to 6.95 per cent in March, a 17-month high, which has soured the sentiments for the domestic consumption story. Besides, there has been a steady rise in crude prices, amid supply worries due to prospects of further sanctions on Russian oil and as the war in Ukraine drags on.
Muted equities and the greenback navigating on a higher trajectory have also added further pressure on the rupee-dollar exchange rate, Sachdeva said.
“Nevertheless, the domestic currency is likely to seek support around the 76.70 mark in the near-term. We feel that the US Fed might not embrace an aggressive monetary tightening path in the second half of the year, finding some comfort from the recent mixed inflation print. This could lead to some renewed risk appetite in the markets and support the Indian rupee,” Sachdeva added.