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Rupee likely to hit 78 per dollar by May-end; hits fresh all-time low 3.57/5 (7)

The rupee breached the psychological barrier of 77 to a dollar on Monday to hit a lifetime low of 77.46 amid the greenback strengthening against major global currencies on the back of a hawkish stance by the US Federal Reserve.

A Business Standard survey showed most respondents see the Indian unit under pressure in the near term and breaching 78 to a dollar levels before the end of the month.

The rupee, which closed 76.92 per dollar on Friday, opened weak at 77.1 after the dollar index gained to move beyond the 104-mark, with the US 10-year bond yield trading at a four-year high of 3.15 per cent.

The previous all-time low was hit on March 7, when the rupee ended the day at 76.97 to a dollar.

“The elevated US yields remain a big risk factor for emerging-market currencies like the rupee. After holding on to the 76.5-76.75 bracket.

it has finally given in to reach new lows in the current move,” said Imran Kazi, vice-president-risk advisory, Mecklai Financial Services. Mecklai Financial sees the rupee hitting 78.5 to a dollar before the month end.

Currency dealers said there was sporadic intervention from the Reserve Bank of India (RBI). The intention was to cushion the fall and not to reverse the trend.

The RBI has been intervening aggressively in the foreign exchange (forex) markets by selling dollars, which resulted in forex reserves coming down by around $45 billion from their all-time high of $642 billion – reached for the week ended September 3, 2021.

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