India Rupee on Tuesday fell to an 18-month low against the greenback amid the growing concerns over the new Coronavirus variants, muted domestic equities and persistent foreign fund outflows weighed on the local unit. It declined by 10 paise to 75.88 against the US dollar.  

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“The Indian rupee has fallen to its lowest level since June 2020, which makes it an 18-month low against the US Dollar. The fall is largely driven by the fear of the rapid spread of the Omnicron variant. This post the UK PM's warning of a 'tidal wave' of new cases, and WHO stating it as a high global risk,” Nish Bhatt, Founder and Chief Executive Officer (CEO) at Millwood Kane International said.   

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. There is a broad weakness across Asian markets ahead of the US Fed's meeting that may announce an accelerated pace of liquidity tightening, Bhatt said adding that a tapering by the US Federal reserve will lead to an outflow of fund flows from emerging markets.  

“The inflation in the US has risen to a multi-decade high, posing a risk for the Fed to act sooner than expected,” she further said. 

The weakness in the rupee is despite record Reserve Bank of India (RBI) reserves of around USD 640 billion, the CEO said.  

The central bank has added over USD 60 billion in forex reserves in FY22.  

“The latest retail inflation data in India hit a 3-month high. The next few days will be dominated by US Fed, ECB, and BoJ as they meet to decide on their respective monetary policy. Central banks' action on rate, liquidity, and the resolve to aid recovery in growth rate will guide global equities and currencies.,” she said, commenting on the likely triggers to watch out for.  o 

At the interbank foreign exchange market, the local currency opened at 75.94 against the greenback. During the day, the local unit witnessed an intra-day low of 75.95 and a high of 75.83 against the US dollar, a PTI report said. 

In the previous session, the rupee had settled at 75.78 against the greenback. 

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.01 per cent down at 96.30, the report further said. 

The stock markets on Tuesday ended on weak note, its second successive loss dragged by auto, banking and financial services sectors. The 50-share Nifty50 index ended at 17,324, down by almost 43 points or 0.25 per cent. However, the markets bounced from the lows of 17,225.80. Meanwhile, the BSE Sensex closed at 58,117.09, down by 166 points or 0.3 per cent. 

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