Rupee Crashes 48 Paise Against US Dollar Following Fed Rate Cut
Forex traders said the US Federal Reserve slashed interest rates by 25 bps in its Federal Open Market Committee (FOMC) meeting.
The rupee depreciated 48 paise to close at 88.70 (provisional) against the American currency on Thursday on a strong US dollar, weak domestic markets, and a hawkish US Fed.
Forex traders said the US Federal Reserve slashed interest rates by 25 bps in its Federal Open Market Committee (FOMC) meeting. However, Fed Chair Jerome Powell's commentary was hawkish, trimming rate-cut expectations for December.
Moreover, month-end dollar demand from Oil Marketing Companies (OMCs) and foreign fund outflows may also weigh on the rupee.
At the interbank foreign exchange market, the rupee opened at 88.37, and later fell to an intra-day low of 88.74. The local unit finally settled at 88.70 (provisional) against the greenback, registering a loss of 48 paise from its previous close.
On Wednesday, the rupee appreciated seven paise to close at 88.22 against the US dollar.
"We expect the rupee to trade with a slight negative bias on a strong US Dollar, weak domestic markets and a hawkish Fed. Month-end dollar demand from OMCs may also weigh on the rupee," said Anuj Choudhary, Research Analyst, Currency and Commodities, Mirae Asset ShareKhan.
The US Fed cut rates by 25 bps, as expected. However, Fed Chair Jerome Powell said the December cut was not a foregone conclusion, given inflation remains above target and labour-market uncertainties persist.
Following Powell's remarks, market expectations of a December rate cut fell sharply, prompting a rise in US Treasury yields and a stronger dollar, traders said.
Choudhary further noted that the weakness in crude oil prices may support the rupee at lower levels. "USDINR spot price is expected to trade in a range of 88.45 to 89," he said.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, fell 0.09 per cent to 99.12.
Brent crude, the global oil benchmark, fell 0.65 per cent to USD 64.50 per barrel in futures trading.
On the domestic equity markets front, the Sensex tanked 592.67 points to settle at 84,404.46, while the Nifty dropped 176.05 points to 25,877.85.
Foreign institutional investors sold equities worth Rs 2,540.16 crore on Wednesday, according to exchange data.
(This report has been published as part of the auto-generated syndicate wire feed. Apart from the headline, no editing has been done in the copy by ABP Live.)
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