Rupee Today: The domestic currency weakened to
The rupee weakened even as the dollar struggled to find a strong footing on Thursday after its biggest jump in a week in the previous session with support from upbeat US data and hawkish policymaker comments.
Bloomberg showed the domestic currency trading at 81.6488, after opening slightly weaker at 81.5375, compared to its previous close of 81.5200.
On Tuesday, the rupee appreciated by 20 paise to end at 81.62 against the US dollar, according to PTI.
The forex market was closed on Wednesday on account of Dussehra.
PTI reported that the rupee depreciated 4 paise to 81.66 against the US dollar in early trade amid high volatility as rising crude oil prices weighed on the local unit.
Sriram Iyer, Senior Research Analyst at Reliance Securities, told PTI that the rupee opened stronger tracking a fall in the dollar over the past two sessions. Moreover, Asian and emerging market peers were also stronger this Thursday morning and lent support.
However, stronger crude oil prices, hawkish rhetoric from Fed officials and JP Morgan’s decision to hold off the inclusion of Indian bonds into its global index weighed on the local unit, Mr Iyer added.
A surge in oil prices reiterated that the inflation fight remains the broader theme among global central banks.
With India importing over 80 per cent of its oil needs, the rise in crude prices will add to the country’s inflation trouble and the widening current account deficit.
What also did not help is the reversal in market expectations for a slowing of aggressive rate hike bets after the US services sector data showed an expansion in September, with a strong labour market and a decline in trade deficit there.
The San Francisco Fed’s president, Mary Daly, reiterated that policymakers’ primary concern is containing inflation while downplaying market expectations for interest rate cuts in 2023.
“I think that just reminded people that you might be a bit premature in trying to price in rate cuts in the US,” Imre Speizer, Currency Strategist at Westpac, told Reuters.
“That pushed up rates and pushed up the US dollar,” he said, as the Federal Reserve’s aggressive moves to rein in inflation set the pace for central banks around the globe.
“It is one trade for the whole world,” said Mr Speizer. “No one currency’s interest rates are really able to go off and do their own thing independently.”
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