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Rupee ends significantly lower against greenback on inflation risk

12 May 2022 Evaluate

Indian rupee ended significantly weaker against the US dollar due to weak domestic equities, persistent foreign fund outflows, surging crude oil prices and general dollar strength. US inflation data hinted at more aggressive tightening by the Federal Reserves to tackle slowdown in economies over world weighed traders’ sentiments. Traders took note of report that the Reserve Bank is likely to raise inflation projections in the Monetary Policy Committee (MPC) meeting next month and would also consider a rate hike to tame inflation, which is above its comfort level. The MPC, headed by the RBI Governor, is scheduled to meet between June 6 and June 8. It has been mandated to keep retail inflation in the range of 2-6 per cent. On the global front, dollar hit its highest in two decades, as fears grew that fast-rising inflation will drive a sharp rise in interest rates that brings the global economy to a standstill.

Finally, the rupee ended at 77.47 (Provisional), stronger by 22 paise from its previous close of 77.25 on Tuesday. The currency touched a high and low of 77.63 and 77.36 respectively.

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