MUMBAI: The rupee posted its steepest absolute fall in over two months on Friday in response to RBI’s dovish policy stance amid raging inflation in global markets like the US, where consumer prices rose to a 40-year high in January.
The local currency fell by nearly 36 paise to the dollar to close at 75.32, a day after RBI left the rate at which it sucks out liquidity from the banking system unchanged, much against financial market expectations.
This was the steepest fall since November 26, when the rupee tumbled 56 paise to the greenback on heavy foreign investor selling, which drove down the Nifty by 510 points over a single session, cited Rohit Srivastava, founder, IndiaCharts.
“Outflows are being witnessed in both domestic debt and equity markets by foreign investors this month on concerns of a stronger dollar (weaker rupee) which reduces their returns in dollar terms,” said Lakshmi Iyer, CIO — Debt and Head — Products at Kotak Mahindra AMC. “That’s one of the reasons for persistent weakness.”
Last month FIIs (foreign institutional investors) sold $4.46 bn of Indian equities while net buying debt of $0.7 bn. In February so far, they’ve sold $1.34 bn of equities and $0.35bn of fixed income, NSDL data till February 10 shows. Weekly dollar-rupee derivatives data shows support for the local unit at 75.80 and resistance at 75.25.