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Rupee hits record low of 81 per dollar, just one bounce, drop and jump

Rupee hits record low of 81 per dollar, just one bounce, drop and jump

Rupee today: Domestic currency fell to record low of 80.86 per dollar

The rupee on Thursday crashed to a new record low against a massive greenback after the Federal Reserve warned of an aggressive policy path on costs, with 81 per dollar now just a hop, skip and jump away, global risks. Driven by a deep loss in assets. of recession to fight increased inflation.

Bloomberg cited the domestic currency as last changing hands at 80.8237 per dollar after crashing to a record low of 80.8550. Down 80 paise from the previous close of 79.9788.

The rupee ended 99 paise lower at a new all-time low of 80.95 against the US dollar, PTI said.

Even as the dollar retreated from a two-decade high, rising US bond yields and sharp comments on future rate hikes by the Federal Reserve put pressure on riskier assets.

Ravindra Rao, Head of Commodity Research, Kotak Securities, said, “The Fed has maintained a firm stance, but the steady pace of rate hikes and a modest improvement in inflation conditions suggest that there is pressure on the central bank to act aggressively. is less.”

“We may see some correction in the US dollar once the central bank acknowledges the improvement in inflationary conditions. Another challenge for the US dollar is the aggressive tightening of their currencies along with the aggressive tightening by other central banks to control inflation. There may be potential central bank intervention to support.” He added.

Investors were unwilling to test RBI’s resolve to protect the rupee from falling below 80 per dollar earlier today, but breaching that level now signals more pain for policymakers.

The Indian currency is not far from reaching 81 per dollar for the first time.

While the rupee’s fall this year has been dramatic and significant, the RBI has reduced the country’s foreign exchange reserves to hedge against the kind of fall it experienced on Thursday.

With the Indian central bank spending more than $80 billion in reserves since Russia invaded Ukraine in late February, the domestic currency is more or less standing its ground compared to its emerging market peers and some developed market currencies.

On the other hand, Japan’s first intervention since 1998 stabilized the yen’s 20 percent decline against the dollar this year, giving the currency some ground.

But unlike the Fed, the Bank of Japan firmly adhered to its ultra-low interest rate policy on Thursday, pushing the yen lower against the US dollar.

Russia’s intensity of its conflict with Ukraine and tensions between Beijing and Taiwan further hurt sentiments, fueled safe-haven flows and plunged global financial markets.

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