HomeBusinessRupee devalues ​​sharply, reacting to Fed rate hike

Rupee devalues ​​sharply, reacting to Fed rate hike

‘Rupee, other currencies may remain under pressure against dollar in near future’

‘Rupee, other currencies may remain under pressure against dollar in near future’

The Indian rupee on Thursday fell sharply against the US dollar after the US Fed raised rates by 75 bps and indicated more rate hikes in the future. The rupee had closed at 80.79, down 83 paise since Wednesday.

“.After the super hawkish Fed and the selloff in equity markets, there was significant discounting of shorts in the dollar. It seems that the central bank has not intervened aggressively,” said Anindya Banerjee, vice president, Currency Derivatives & Interest Rate Derivatives, Kotak Securities Limited said.

“However, in the coming sessions, we expect RBI to step in and control volatility. So a range of 80.40 and 81.20 can be seen.”

“We believe that the dollar index may see a significant rise, which means that most major market currencies, including the rupee, should be under pressure,” said Naveen Kulkarni, chief investment officer, Axis Securities Portfolio Management Services. From the perspective of US dollar returns for FPIs, India becomes unattractive if the rupee starts to see a depreciation.

“We may also see a reversal of FPI inflows in the near to medium term, leading to increased volatility in the market. Higher interest rates in the US will force major central banks, including India, to raise interest rates to ease pressure on their domestic currencies, and with increased interest rates and cost of capital, market multipliers could contract. We believe that volatility in the Indian stock market may increase in the near future.

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