Re tanks to all-time low on Fed move
Tumbles 90 paise to 80.86 against US dollar on Thursday; Spot USD-INR now has resistance in 81.25-81.40 range
Mumbai: The Indian rupee plunged 90 paise to close at an all-time low of 80.86 against the US dollar on Thursday after the US Federal Reserve's interest rate hike and its hawkish stance weighed on investor sentiments.
Forex traders said the US Fed's rate hike and escalation of geo-political risk in Ukraine sapped risk appetite. Moreover, the strength of the American currency in the overseas market, a muted trend in domestic equities, risk-off mood and firm crude oil prices weighed on the rupee. At the interbank foreign exchange (forex) market, the local currency opened at 80.27, then fell further to an all-time intra-day low of 80.95 against the American currency. It finally ended at 80.86, down 90 paise over its previous close of 79.96. The US Fed hiked interest rates by 75 basis points to 3-3.25 per cent. It was the third straight 75 basis points hike. Fed Chair Jerome Powell reiterated the central bank's commitment to taming inflation. Focus will be on Bank of Japan (BoJ) and Bank of England (BoE) monetary policies next, forex traders said.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, advanced 0.38 per cent to 110.06. Besides the hawkish US Fed stance, the US Dollar extended gains against its major crosses after Russian President Vladimir Putin announced partial military mobilisation.
"An aggressive Fed Chair Jerome Powell and Russian President Vladimir Putin's escalation of geopolitical risk in Ukraine turned on the green light for King Dollar against most currencies," said Dilip Parmar, Research Analyst, HDFC Securities. Rupee along with other Asian peers tumbled to a record low. "We believe the current downtrend in the rupee may continue for a while even after strong domestic fundamentals. The local currency will react to a stronger greenback, but there could be outperformance among the regional currencies," Parmar said, adding that spot USD-INR now has resistance in the area of 81.25 to 81.40 while the previous top 80.12 would act as support. Global oil benchmark Brent crude futures rose 0.36 per cent to $90.15 per barrel.