Rupee slips for the first time below 81-mark against US dollar
Mumbai, September 23, 2022
The Indian rupee fell below 81-mark against the US dollar during the early morning trade for the first time against the US dollar.
This was because of uncertainty created after the uptick in dollar index, increase in policy rate by the US Fed and Bank of England, and escalation in geopolitical tensions between Russia and Ukraine.
Moreover, the negative trends in the domestic equities also weigh on sentiments.
At the interbank foreign exchange market, the rupee opened at 81.08 against the greenback, then fell further to 81.23, registering a fall of 44 paise over its previous closing.
On Thursday, rupee depreciated 88 paise to close at all-time low of 80.86 against the US dollar.
The Bank of England hiked its base rate by 50 basis points to 2.25 per cent.
The dollar index, which gauges the greenback's strength against a basket of six currencies, advanced 0.28 per cent to 111.412.
A report from ICICI Securities said the Dollar Index may continue with its positive bias as the US Fed decided to raise interest rate by 75 bps, for a third consecutive month and signalled that it would continue to lift rates this year at a most rapid pace to combat inflation, which is running hot.
Additionally, the US Federal Reserve announced it would continue with its plan to shrink its $9 trillion asset portfolio, which plays an important role in firming stance of monetary policy. Additionally, in this year two policy meets are pending, which may see a 75 bps rate hike in November meet and 50 bps in December meeting. Additionally, other major central banks across the globe are likely to tag behind in tightening monetary policy, high inflation and dwindling economic growth.
As long as the Dollar Index sustains above 107.50 level it may continue to rally till 113/114 levels.