Home Business Rupee depreciates from 81.52 to $81.64 despite rise in riskier assets

Rupee depreciates from 81.52 to $81.64 despite rise in riskier assets

Rupee today: Domestic currency weak

The rupee weakened in the previous session despite the dollar struggling to strengthen after its biggest jump in a week, supported by upbeat US data and comments from sharp policymakers.

Bloomberg showed the domestic currency trading at 81.6488, having opened slightly weaker at 81.5375, compared to the previous close at 81.5200.

According to PTI, the rupee on Tuesday gained 20 paise to close at 81.62 against the US dollar.

The forex market was closed on Wednesday on account of Dussehra.

The rupee depreciated by 4 paise to 81.66 against the US dollar in early trade amid high volatility as crude oil prices edged higher on the local unit, PTI reported.

Sriram Iyer, Senior Research Analyst, Reliance Securities, told PTI that the rupee opened stronger on the back of the dollar’s fall in the last two sessions. Moreover, Asian and emerging market peers were also strong this Thursday morning and provided support.

However, firm crude oil prices, flamboyant rhetoric by Fed officials and JP Morgan’s decision to stop including Indian bonds in its global index weighed on the local unit, Mr Iyer said.

The surge in oil prices reiterated that the fight against inflation remains a broad topic among global central banks.

As India imports more than 80 per cent of its oil needs, a rise in crude oil prices will add to the country’s troubles of inflation and the current account deficit.

A reversal in market expectations to slow down bets of aggressive rate hikes did not help either in September, with a strong labor market and a narrowing trade deficit, as US services sector data expanded.

Mary Daly, the chair of the San Francisco Fed, reiterated that the primary concern of policymakers is to control inflation while lowering market expectations for interest rate cuts in 2023.

“I think it just reminds people that you can be a little premature in the US trying to cut rates,” Westpac currency strategist Imre Spieser told Reuters.

“That drove rates up and the US dollar up,” he said, as the Federal Reserve’s aggressive moves to rein in inflation set the pace for central banks around the world.

“It’s a business for the whole world,” said Mr. Spicer. “No currency’s interest rates are really able to lock down and do their job independently.”

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