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Rupee Strengthens Against US Dollar On Positive Domestic Equities

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Rupee Strengthens Against US Dollar On Positive Domestic Equities
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The rupee strengthen as the dollar weakened after the U.S. Fed decided to hike interest rates.

New Delhi: The Indian rupee firmed on Thursday, tracking gains in the domestic equity indices. At the interbank foreign exchange market, the domestic unit opened 27 paise higher at 75.94 against the U.S. dollar against its previous of 76.21, news agency PTI reported. It had hit a nearly two-week high on Wednesday.

The rupee strengthen as the dollar weakened after the U.S. Federal Reserve decided to hike interest rates. The U.S. central bank has raised rates by 25 basis points (bps) and mentioned similar hikes in the way forward.

The dollar index, which tracks the currency against six major peers, remained weak today, slipping an additional 0.12 per cent to 98.360 after declining 0.47 per cent on Wednesday.

Currency Desk, Emkay Global Financial Services: “Fed announced the dawn of a new beginning by raising interest rates by 25 bps for the first time in 2 years assessing the impact of the darkest inflation on the U.S. economy. It indicated the interest to rise to about 1.9 per cent in 2022 and to rise near 2.8 per cent in 2023 in its dot plot projections. The dollar index failed to climb despite the hawkish Fed as the investors assessed the risk of stagflation for the U.S. economy after Fed lowered the GDP growth projections for 2022 to 2.8 per cent, from the 4 per cent in December. Today, the Indian rupee has opened on a strong note and is expected to trade in the range of 75.70- 76.30 following the weakness in the dollar index and positive global sentiments.”

Amit Pabari, Managing Director, CR Forex: “For now, the major hiccups for the rupee have settled down with Fed policy risk left behind, cool off in commodity rally and the Russia-Ukraine talks ending positive. We expect the rupee to enter a consolidation phase between 75.70-76.60 for short to medium term before it comes back to its conviction of moving higher above 77.00 levels.”

The domestic bourses were trading on a strong note with BSE Sensex and NSE Nifty up more than 1.5 per cent, respectively.

Crude oil ticked higher after the International Energy Agency (IEA) said a decline in oil demand due to higher prices would not offset a shut-in of Russian oil supplies, but not enough to offset the declines of the previous day.

Brent crude futures were up about 66 cents, or 0.67 per cent, to $98.68 a barrel, compared with a recent peak of $129.30. U.S. West Texas Intermediate (WTI) crude was up 84 cents, or 0.86 per cent, to $95.86 a barrel, versus a top earlier this month of $124.58.

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