Rupee falls 21 paise against US dollar as Fed’s hawkish stance boosts greenback
The rupee fell 21 paise to 94.71 against the US dollar in early trade on Thursday as the Federal Reserve's hawkish outlook strengthened the greenback. However, easing crude oil prices and improving geopolitical sentiment provided support to broader financial markets.
Mumbai: The rupee depreciated 21 paise to 94.71 against the US dollar in early trade on Thursday on US Federal Reserve’s hawkish stance and the broad strength of the American currency in the overseas market.
Forex traders said the dollar Index rose to 100.23 levels, a 4-month high, due to a hawkish FED. The FED Reserve held interest rates steady as widely anticipated but implied that at least one quarter-point rate hike would come later this year.
At the interbank foreign exchange market the rupee opened at 94.66, then touched 94.71, registering a fall of 21 paise from its previous close.
On Wednesday, the rupee appreciated 10 paise to close at 94.50 against the US dollar.
“Asian currencies had also weakened considerably, taking the rupee lower this morning. Most asset classes had fallen against the dollar keeping it well bid while the asset class was well offered,” said Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading at 0.14 per cent up at 100.23.
Brent crude, the global oil benchmark, was trading lower by 1.68 per cent at USD 78.21 per barrel in futures trade.
On the domestic equity market front, Sensex declined 111.23 points to 77,044.39 in early trade, while the Nifty dipped 26.85 points to 24,058.85.
Foreign institutional investors turned net buyers and purchased equities worth Rs 101.59 crore on a net basis on Wednesday, according to exchange data.
According to traders markets had other reasons to stay optimistic as reports indicated that the United States and Iran have electronically signed a memorandum of understanding aimed at ending hostilities and creating a framework for negotiations on Iran’s nuclear programme. Negotiators are expected to meet in Geneva on Friday.
“The agreement has improved market sentiment considerably, although President Trump simultaneously warned that military action could resume if Iran fails to comply with the framework,” CR Forex Advisors MD Amit Pabari said.
Meanwhile, Prime Minister Narendra Modi and US President Donald Trump directed their officials to work towards a balanced, mutually beneficial and commercially meaningful trade agreement at the earliest.
The Ministry of External Affairs (MEA) said this on Thursday, a day after the two leaders held wide-ranging talks for the first time in 16 months on the margins of the G7 Summit in an attempt to rebuild the strained bilateral ties.
US Trade Representative, Jamieson Greer, will be visiting India next week to take forward the talks on the proposed trade deal.
