Hawkish Fed adds to rupee's troubles, traders watch 96/USD hurdle
The rupee is expected to open slightly weaker around 96-96.05 per dollar, down from its previous close of 95.9550
The Indian rupee may weaken below the 96 rupees per dollar level on Thursday, according to traders who are watching the impact of the US Federal Reserve's interest rate hike. The central bank raised rates by 25 basis points on Wednesday, its first increase since 2023, with officials anticipating further tightening this year. This move pushed the dollar index above 100, marking its highest level in over a month.
The Fed's action follows an increase in Europe and comes before a possible rate rise in Japan on Friday, as global central banks fight rising inflation. With no immediate signs of inflation easing, particularly due to the Middle East crisis, the Fed may need to continue tightening to meet its goals. Analysts note a 50% chance of another Fed hike next month to curb inflation.
The rupee's decline is also affected by high oil prices and foreign portfolio outflows from Indian stocks and bonds. Traders believe anchor investments, such as the IPO of India's largest stock exchange, and Reserve Bank of India interventions may help support the currency. However, a further weakening of the rupee below 96 could worsen sentiment.
The National Stock Exchange of India will open for subscriptions on Thursday, after allocating shares worth $703 million to new investors on Wednesday.
Written by urgent.news from Hindu BusinessLine's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
