MUMBAI: The rupee ended 89 paise lower to close at 82. 73 against the dollar as the greenback surged against most currencies following improved US economic data. A better-performing US economy increases chances of the US Federal Reserve keeping rates high for longer to stem inflation. Higher rates lead to a dollar appreciation as global funds are drawn to the US.
The 89-paise drop was the sharpest fall by the rupee since September 2022. The last time the Indian currency was at this level was January 3, 2023. The rupee, which has been trading below 81 levels since January 10, weakened last week after the US Fed raised rates by 25 basis points (100bps = 1 percentage point).
“What we are seeing is a reversal of the dollar weakness on the back of strong USnon-farm payroll data. As against an expected rise of 186,000, hiring in terms of non-farm payrolls jumped 517,000,” said DBS Bank head (treasury) Ashhish Vaidya.
“This is not a rupee weakness or a risk-off sentiment in global markets and is more of a rise in the dollar index. If the dollar continues to strengthen, there is a possibility that the rupee may breach 83,” said Vaidya.
Some bankers said that outflows were expected because of the cancellation of the follow-on public offer by Adani Enterprises, as investors who had brought in forex would return.
The 89-paise drop was the sharpest fall by the rupee since September 2022. The last time the Indian currency was at this level was January 3, 2023. The rupee, which has been trading below 81 levels since January 10, weakened last week after the US Fed raised rates by 25 basis points (100bps = 1 percentage point).
“What we are seeing is a reversal of the dollar weakness on the back of strong USnon-farm payroll data. As against an expected rise of 186,000, hiring in terms of non-farm payrolls jumped 517,000,” said DBS Bank head (treasury) Ashhish Vaidya.
“This is not a rupee weakness or a risk-off sentiment in global markets and is more of a rise in the dollar index. If the dollar continues to strengthen, there is a possibility that the rupee may breach 83,” said Vaidya.
Some bankers said that outflows were expected because of the cancellation of the follow-on public offer by Adani Enterprises, as investors who had brought in forex would return.
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