MUMBAI: The Indian rupee slumped on Tuesday to close at a two-week low against the US dollar due to weakness in domestic equities and a strong dollar index.
The Indian unit closed at 75.43 a dollar–a level last seen on 1 July–down from its previous close of 75.20. It had opened at 75.34 and touched an intra-day high of 75.29 and a low of 75.50. Year to date, the Indian currency has shed 5.37%.
The dollar index, which gauges the greenback’s strength against a basket of six currencies, rose 0.1% to 96.56.
Sentiment was hit as data released showed that India’s June Consumer Price Index (CPI) has breached Reserve Bank of India’s tolerance band of 6%, traders said.
Retail inflation rose to 6.09% in June, mainly on account of higher prices of food items, government data had showed on Monday. Food inflation was at 7.87%.
At 0210 pm, the BSE benchmark Sensex fell 781.26 points to 35912.43, while the Nifty 50 was 1.7% at 10,622.75.
Foreign institutional investors have net sold $2.60 billion and $14.27 billion in equity and debt markets respectively since the beginning of 2020, while domestic institutional investors invested ₹86768.33 crore in stocks, according to data on the exchanges.
Brent crude futures were down 2.01% at $41.86 per barrel, providing a cushion to the rupee. India is one of the largest importers of crude oil and a fall in global prices helps keep the import bill in check.