Rupee declines by 33 paise as stimulus fails to cheer investors

The rupee plummeted by 33 paise to close at 75.91 against the US dollar on Monday, tracking weak domestic equities and foreign fund outflows.

Forex traders said rising crude oil prices and concerns about the effectiveness of the fiscal stimulus package weighed on investor sentiment.

"India's rupee led losses among emerging-market currencies in Asia on disappointment over the government's stimulus announcements. Spot USDINR is expected to find resistance around 76.50 on expectation of foreign fund inflows at lower equity levels," said Devarsh Vakil, Head Advisory, HDFC securities.

Market participants also said that the extension of the nationwide lockdown could weigh on the economic outlook of the country.

The government on Sunday extended the coronavirus lockdown for two more weeks with the fourth phase providing more relaxations outside the containment zones.

Though some restrictions were eased, "but the extension could further worsen the economic outlook for the current fiscal year, which could weigh on the currency further," Reliance Securities said in a research note.

The local unit opened sharply lower at 75.85, then lost further ground to finally settle at 75.91 against the US dollar, down 33 paise over its previous close.

It had settled at 75.58 against the US dollar on Friday.

Meanwhile, BSE Sensex crashed 1,069 points or 3.44 per cent on Monday tracking massive selloffs in banking and auto stocks. The wide-based NSE Nifty dropped 313 points or 3.43 per cent.

Foreign institutional investors were net sellers in the capital market, as they sold equity shares worth Rs 2,388.04 crore on Friday, according to provisional exchange data.

Brent crude futures, the global oil benchmark, rose 4.22 per cent to USD 33.87 per barrel.

According to Jateen Trivedi, Senior Research Analyst (Commodity & Currency) at LKP Securities, "The rupee extended weakness on likely overseas outflows from local stocks, amid oil importers demand as crude prices scale high."