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The rupee closed at a fresh all-time closing low of 78.0650 per dollar on Wednesday due to demand for the greenback from foreign portfolio investors, who continued to repatriate the proceeds from sale of their Indian equity investments and oil marketing companies.
The Reserve Bank of India (RBI) is believed to have intervened in the market in a big way, selling dollars via State-owned banks to prevent sharp depreciation of the Indian unit (INR). Continuous dollar sales by the central bank prevented the rupee from breaching the intraday low of 78.10. INR closed 8 paise weaker compared to the previous close of 77.9850.
IFA Global, in a note, observed that persistent foreign fund outflows, strong dollar and elevated crude oil prices continued to weigh on investor sentiments. “Federal Reserve policymakers are expected to deliver the biggest US interest rate hike in decades. A lot would depend on the dot plot and inflation projections as it would reveal where the Fed members see the terminal Fed funds rate. Fed Chair Powell’s tone in the post policy press conference will be crucial. If the Fed indicates that it is willing to go all out to tame inflation, dollar strength may continue,” the note said.
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