Rupee falls 11 paise to close at 82.03 against US dollar

The rupee depreciated 11 baisa, closing at 82.03 (temporary) against the US currency on Wednesday as the strong dollar in overseas markets affected investor sentiment.

Forex traders said the dollar index gained strength after US Federal Reserve Chairman Jerome Powell reignited fears of a 50 basis point rate hike at the Federal Open Market Committee (FOMC) meeting to be held on March 21-22, 2023.

In the interbank foreign exchange market, the rupee opened at 82.25 against the dollar and closed at 82.03 (temporary), registering a decrease of 11 pounds from the previous close of 81.92 on Monday.

Stock and money markets were closed on Tuesday on account of Holly.

During the session, the local unit witnessed its highest level during the day at 81.98, and the lowest level at 82.29 against the US dollar.

Meanwhile, the dollar index, which measures the strength of the greenback against a basket of six currencies, rose 0.13 percent, at 105.75.

Powell said that recent economic data released in the US is stronger than expected. He also added that the US central bank would be willing to increase the pace of interest rate hikes if the overall data indicates that a faster tightening is warranted.

“The odds of a 50 basis point rate hike have risen to 70 per cent from 24 per cent the day before,” said Anuj Chowdhury – Research Analyst at Sharekhan by BNP Paribas.

Shorter-term US Treasury yields also rose, sending the US dollar to a three-month high. Chaudhry added that markets now expect final interest rates to be higher than the previous estimate of 5.4 percent.

Brent crude futures fell 0.16% to $83.16 a barrel.

“We expect the rupee to trade with a negative tendency to risk aversion in the following global markets Powell’s testimonyChowdhury said.

A stronger US dollar and weaker risk assets could put downside pressure on the rupee. However, the weak tone in crude oil prices and FII flows may support the rupee at lower levels, Chowdhury added.

BSE Sensex, which includes 30 shares, closed down 123.63 points, or 0.21 percent, at 60,348.09, while the broader NSE Nifty index fell 42.95 points, or 0.24 percent, to 17,754.40.

Foreign institutional investors (FIIs) were net buyers in the capital markets on Monday buying shares worth ₹721.37 crore, according to exchange data.