Rupee slides 30 paise to 76.83 against US Dollar amid oil price slump

The rupee on Tuesday slid by 30 paise to close at 76.83 against the US currency due to forex outflows and strengthening of the dollar in overseas markets.

Investors rushed to safe-haven bet US dollar due to market uncertainty after oil prices slumped into negative territory in US markets hit by weak demand after coronavirus-related lockdowns, traders said.

The rupee opened weak at 76.79 at the interbank forex market and during the day lost further ground and finally settled at 76.83, down 30 paise over its last close. The rupee had settled at 76.53 against the US dollar on Monday.

During the session, the rupee witnessed high volatility and touched a high of 76.62 and a low of 76.84 against the US dollar.

WTI crude oil futures collapsed to negative; while Brent crude futures, the global oil benchmark, fell 14.47 per cent to USD 21.87 per barrel.

Stock market benchmark index Sensex sank over 1,011 points or 3.20 per to 30,636.71. The NSE Nifty plummeted 280.40 points, or 3.03 per cent, to 8,981.45.

The dollar index, which gauges the greenback's strength against a basket of six currencies, rose by 0.25 per cent to 100.20.The number of cases around the world linked to the new coronavirus has crossed over 24.81 lakh. In India, nearly 18,600 coronavirus cases have been reported so far.

"Rupee witnesses strong fallout again, due to likely overseas outflows from local stocks amid oil importers dollar demand and a strong greenback. Local stocks declined tracking sharp fall in global equities, after US oil prices slipped below $0 a barrel during overnight trades," said Jateen Trivedi, Senior Research Analyst (Commodity & Currency) at LKP Securities.
 

Trivedi further noted that "a plunge in oil prices heightened investor concerns about global growth. Adding fuel to already weak sentiments, US President Donald Trump's announcement that he would sign an executive order to temporarily suspend immigration into the US also weighed down hence rupee weakness scaled to new low very near to 77 per US dollar".

Foreign institutional investors (FIIs) were net sellers in the capital markets, as they sold shares worth Rs 265.89 crore on Monday, provisional data showed.

The Financial Benchmark India Private Ltd (FBIL) set the reference rate for the rupee/dollar at 76.6335 and for rupee/euro at 83.1719. The reference rate for rupee/British pound was fixed at 95.4894 and for rupee/100 Japanese yen at 71.05.

"The currency was also weighed down after the dollar strengthened against its major crosses. From the US, market participants will be keeping an eye on the weekly jobless claims number that will be released this week and a higher claims number could keep the greenback under pressure," said Gaurang Somaiyaa, Forex & Bullion Analyst, Motilal Oswal Financial Services.