Rupee settles substantially weaker against dollar

Erasing previous session gains, Indian rupee settled substantially weaker amid unabated foreign fund outflows and stronger greenback in overseas markets. Sentiments were fragile as S&P Global Ratings cut India's growth projection for the current fiscal to 7.3 percent from 7.8 percent earlier on rising inflation and the longer-than-expected Russia-Ukraine conflict. In its Global Macro Update to Growth Forecasts, S&P said inflation remaining higher for a long is a worry, which requires central banks to raise rates more than what is currently priced in, risking a harder landing, including a larger hit to output and employment. Meanwhile, RBI's monthly bulletin for May 2022 said Reserve Bank of India turned net seller of the US currency in March after it sold $20.101 billion on a net basis in the spot market. On the global front, dollar edged higher on Wednesday, a day after posting its biggest single-day drop in more than two months after U.S. Federal Reserve chief Jerome Powell struck a more hawkish tone as the central bank battles to rein in surging inflation.

Finally, the rupee ended at 77.61 (Provisional), weaker by 17 paise from its previous close of 77.44 on Tuesday. The currency touched a high and low of 77.61 and 77.47 respectively.