Rupee Today: The domestic currency weakens to about 79.75 per dollar
The rupee marked its worst week in five on Friday as the dollar soared to a new record high on larger-sized Federal Reserve rate hike bets and as the World Bank and the International Monetary Fund warned of slowing economic growth with a surging inflation backdrop.
Bloomberg quoted the rupee last changing hands at 79.7450 against the rampant greenback, compared to its previous close of 79.7012, while PTI reported that the domestic currency fell 5 paise to close provisionally at 79.76 against the US dollar.
“We expect the rupee to trade with a negative bias on the strong dollar and risk aversion in global markets. Global markets declined after IMF spokesman Gerry Rice flagged concerns over further slowdown in the global economy and said that some countries are expected to slip into recession in 2023,” Anuj Choudhary, Research Analyst at Sharekhan by BNP Paribas, told PTI.
“USD-INR spot price is expected to trade in a range of Rs 79 to Rs 80.50 in the next couple of sessions,” Mr Choudhary added.
Reuters reported that for the week, the rupee declined 0.2 per cent, its biggest loss since the week ended August 12.
A foreign exchange trader told Reuters that market participants were wary that the rupee had not been allowed to weaken past 80 per dollar and saw it as a level to protect.
Traders were likely unwinding long dollar positions and creating fresh shorts, he added.
Adding to the rupee’s troubles was a crash in domestic equity benchmarks.
The downbeat tone in global markets further reflected warnings of slowing economic growth worldwide from the IMF and the World Bank.
The demand for the greenback remained robust due to predictions that the Fed would need to raise interest rates more aggressively to keep red-hot inflation under control.
The dollar’s strength pushed China’s offshore yuan past the psychologically key 7-per-dollar level for the first time in nearly two years.
Indeed, even though the People’s Bank of China set the reference rate for the currency stronger-than-forecast for a 17th straight day, the offshore yuan continued to trade below 7 to the dollar.
“While China activity showed some improvement this morning, equity investors really want to see substantial easing in China’s policies related to Covid to turn a bit more constructive,” Chetan Seth, Asia-Pacific equity strategist at Nomura Holdings Inc. in Singapore, told Bloomberg. “That has not happened.”
The economic gloom was not restricted to Asia alone; retail sales in the UK decreased more than anticipated, which is another indication that the economy is heading for a recession as the cost-of-living problem reduces people’s disposable income.
That pushed the British pound to a 37-year low against the US dollar.
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