The rupee gains 1 paisa to close at 77.49 against the US dollar

On a weekly basis, the rupee depreciated by 57 paise due to a stronger dollar index, risk aversion sentiment and outflows of foreign funds.

On a weekly basis, the rupee depreciated by 57 paise due to a stronger dollar index, risk aversion sentiment and outflows of foreign funds.

The Rupee pared its initial gains and settled just 1 paisa higher at 77.49 (tentative) against the US Dollar on Friday as inflationary concerns and the strength of the US currency weighed on the local unit.

Forex traders said the rupiah consolidated in a narrow range as weak regional currencies and depressing economic data weighed on national unity, while intervention by the Reserve Bank of India (RBI) limited the loss.

In the interbank forex market, the rupiah opened at 77.35 against the greenback and moved within a range of 77.26-77.49 in day’s trade.

The rupiah eventually finished at 77.49, up just 1 paisa from its previous close.

On Thursday, the rupee plunged 25 paise to close at an all-time low of 77.50 against the US currency.

On a weekly basis, the rupee depreciated by 57 paise due to a stronger dollar index, risk aversion sentiment and outflows of foreign funds.

“Of all drivers, the liquidity factor is inevitably a key driver of recent market moves and market participants are rushing for safe-haven assets,” said Dilip Parmar, research analyst at HDFC Securities.

On Friday, risk appetite remained dismal, with the benchmark equity index erasing morning gains and the rupee also heading higher against the dollar, Parmar said, adding that “weakness in regional currencies and economic data depressing pressures on the local unit while the intervention of RBI limited the losses”. Meanwhile, India’s headline inflation galloped for a seventh consecutive month to an 8-year high of 7.79% in April due to rising food and fuel prices, raising the odds of an interest rate hike by the RBI early next month to bring prices under control.

With manufacturing output measured in terms of the Industrial Production Index (IPI) remaining subdued at 1.9% in March, some economists believe a further rise in interest rates after a 40 basis point rise last week could slow economic growth.

On the domestic stock market front, the BSE Sensex ended down 136.69 points or 0.26% at 52,793.62, while the broader NSE Nifty fell 25.85 points or 0.16% at 15,782.15.

The dollar index, which measures the strength of the greenback against a basket of six currencies, fell 0.05% to 104.79.

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