Forex

Rupee falls 19 paise to 79.13 against US dollar

PTI | | Updated on: Jul 07, 2022

Domestic unit declines amid expectations for another aggressive rate hike by the US Federal Reserve

The rupee declined 19 paise to close at 79.13 (provisional) against the US dollar on Thursday, as the hawkish stance of the US Federal Reserve increased the possibility of another aggressive rate hike this month.

At the interbank foreign exchange market, the local currency opened at 79.05 and finally ended at 79.13, down 19 paise over its previous close.

On Wednesday, the rupee closed at 78.94.

"The rupee opened on a flat note but started to come under pressure despite measures announced by the RBI," said Gaurang Somaiya, Forex & Bullion Analyst, Motilal Oswal Financial Services.

The RBI on Wednesday raised overseas borrowing limits for companies and liberalised norms for foreign investment in government bonds, as it announced a slew of measures to boost foreign exchange inflows in efforts to curb the fall of the rupee.

The central bank had also said it has been closely and continuously monitoring liquidity conditions in the forex market and has stepped in as needed in all its segments to alleviate dollar tightness with the objective of ensuring orderly market functioning.

Forex traders said the US Federal Reserve's minutes of the meeting held last month indicated a hawkish stance and a rate hike of 75 basis points is likely in July. The minutes were released on Wednesday.

"Dollar rose against its major crosses after the minutes reaffirmed the Fed's intent to get prices under control to address stubborn inflation," Somaiya said, adding, "We expect the USD-INR to trade sideways but with a positive bias, and quote in the range of 79.05 and 79.80."

The dollar index, which gauges the greenback's strength against a basket of six currencies, fell 0.21 per cent to 106.86.

Brent crude futures, the global oil benchmark, advanced 0.81 per cent to $101.51 per barrel.

On the domestic equity market front, the BSE Sensex ended 427.49 points or 0.80 per cent up at 54,178.46, while the broader NSE Nifty jumped 143.10 points or 0.89 per cent to 16,132.90.

Foreign institutional investors were net sellers in the capital market on Wednesday as they offloaded shares worth Rs 330.13 crore, as per stock exchange data.

Published on July 07, 2022
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