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Rupee slumps 23 paise to 76.65 against the dollar in early trade

The rupee declined on Monday, tracking a broader sell-off in risk assets following hawkish comments from the US Federal Reserve, indicating a more significant and faster rate hikes path.

Indeed, the dollar index, which measures the greenback’s performance against six of its peers, was trading higher at 101.08 on Monday morning, just shy of a two-year peak of 101.33 hit on Friday.

The dollar’s surge has been led by the aggressive posturing by Federal Reserve policymakers for more significant and faster rate hikes to fight runaway inflation, and the resultant hit to the global economy has weighed on investor sentiment.

On Monday, Asian stocks fell, Indian equities slipped, and crude oil prices tumbled over 2.5 per cent to below $104 per barrel on demand worries driven by the restrictions in China and economic growth concerns.

The rupee was no exception, falling 23 paise to 76.65 against the dollar after opening at 76.58. On Friday, according to PTI. The rupee had declined by 25 paise to close at 76.42 per dollar.

While the surge previously hit the energy-sensitive currency in crude oil prices – an immense fallout from the Russia-Ukraine war, the exodus from Indian capital markets has not helped the currency in recent times.

Indeed, fears of aggressive Fed rate hikes have dented sentiments, with foreign investors pulling out nearly ₹ 12,300 crores from Indian equities this month.

The BSE Sensex index fell over 470 points to 56,711, and the Nifty 50 index was down at 17,007, extending their losses from last week.

Last week, eight of the top-10 most valued firms based on market capitalisation lost ₹ 2,21,555.61 crore from their valuation, lining up with the weak trend in the broader market, with Infosys and HDFC Bank suffering the biggest hit.

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