Dollar vs Rupee: The Indian rupee fell 48 paise to close at 88.70 (provisional) against the US dollar on Thursday. This weakness of the rupee was mainly seen due to the strong US dollar, weak domestic stock markets and the aggressive stance of the US Federal Reserve. The Federal Reserve cut interest rates by 0.25 percent in its FOMC meeting, but Chairman Jerome Powell’s comments shocked market expectations.
Why is the rupee weakening?
He clearly said that there is no guarantee of a rate cut in December because inflation is still above the target and there is uncertainty in the labor market. After this statement, there was an increase in American bond yields and strengthening of the dollar.
Domestically, dollar demand from oil marketing companies and outflow of foreign capital put additional pressure on the rupee. In the interbank foreign exchange market, the rupee opened at 88.37 and reached a low of 88.74 during trading.
There may still be pressure on the rupee
At the same time, on Wednesday the rupee had closed at 88.22 against the dollar. Analysts say that the rupee may remain under pressure in the coming days also. According to Anuj Chaudhary of Mirae Asset Sharekhan, strong dollar, weak domestic market and Fed’s strict policy can push the rupee towards lower levels.
Meanwhile, the dollar index fell marginally by 0.09 per cent to 99.12, while Brent crude oil fell by 0.65 per cent to $64.50 per barrel. A huge fall was also recorded in the domestic stock markets, where the Sensex fell by 592 points to close at 84,404 and the Nifty fell by 176 points to close at 25,878. Foreign institutional investors sold shares worth Rs 2,540 crore on Wednesday, putting pressure on both the market and the rupee.
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