Comments
Snapping its three-day winning streak, the rupee tanked 55 paise, its steepest single-day fall in a month, to close at a one-week low of 75.84 against the US dollar on Wednesday as expectations of aggressive rate hikes by the US Federal Reserve bolstered the American currency.
Forex traders said expectations of steeper rate hikes by the US Fed to rein in decades-high inflation are keeping the dollar index buoyant, a key headwind for the Indian rupee.
Forex outflows from the capital markets also put pressure on the local unit.
US Federal Reserve Governor Lael Brainard on Tuesday said the central bank is set to keep raising rates after its March hike and might decide at its May meeting to reduce bond holdings “at a rapid pace”.
At the interbank foreign exchange market, the rupee opened at 75.50 against the American currency but lost ground and settled at 75.84, down 55 paise from the previous close.
On Tuesday, the rupee had climbed 24 paise to close at 75.29 against the US dollar.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.04 per cent higher at 99.51.
Global oil benchmark Brent crude futures jumped 1.55 per cent to USD 108.29 per barrel.
According to Dilip Parmar, Research Analyst, HDFC Securities the rupee snapped its winning streak and was the worst performer among Asian currencies as Fed members spoke about balance-sheet reduction along with rate hikes.
“Hawkish tone from US Fed members pushed risk assets lower while dollar and bond yields surged to multi-month high.
“Ahead of the RBI monetary policy decision, USD/INR is likely to trade in the range of 75.30 to 76,” Parmar noted.
Hawkish comments from the Fed official last night triggered a sharp upmove in US bond yields and the US Dollar Index, said Anindya Banerjee, VP, Currency Derivatives & Interest Rate Derivatives at Kotak Securities.
“Tonight focus will be on the US FOMC minutes. Traders will seek clarity on the pace of balance sheet reduction and the quantum of the next hike. Over the near-term USDINR is expected to trade within a range of 75.45 and 76.20 on spot,” Banerjee said.
“The Indian Rupee depreciated in line with the selloff in global markets as the US Treasuries surged higher ahead of the release of the Federal Reserve’s last month meeting minutes,” said Sriram Iyer, Senior Research Analyst at Reliance Securities.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.