HomeBusinessRupee slips again to 80 points after US Fed hikes rates

Rupee slips again to 80 points after US Fed hikes rates

Mumbai: Indian stocks fell marginally on Thursday morning in line with weak global cues, following another policy rate hike by the US Federal Reserve in its fight against high inflation. However, a sharp decline was likely as investors had already discounted a possible rate hike by the US central bank.

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At 9.33 am, the Sensex was trading at 59,303.96, down 152.82 points or 0.26 per cent, while the Nifty was trading at 17,671.95, down 46.40 points or 0.26 per cent.

Chief Investor VK Vijayakumar said, “From the Indian market perspective, the big question is whether India will continue to outperform in terms of current global risks. Investors can remain optimistic, but be cautious as India’s valuations remain high. ” Strategist at Geojit Financial Services.

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“Financial, capital goods, select auto, telecom and construction related stocks can be bought on the downside,” Vijayakumar said.

Meanwhile, the Indian currency rupee again broke the psychologically important 80 mark and touched another fresh record high of 80.44 against the previous day’s high of 79.97 against the US dollar. This sharp depreciation was on account of the current strength in the US dollar index. The key policy rate in the US was raised by 75 basis points to 3.0-3.25 percent – the third consecutive increase of the same magnitude.

The US central bank wants to achieve maximum employment and inflation at 2 percent over the long term and anticipates that an ongoing increase in the target range would be justified. Reacting to the rate hike move, US stocks fell nearly 2 percent to close the day. Consumer inflation in the US, however, declined marginally to 8.3 per cent in August from 8.5 per cent in July, but is well above the target of 2 per cent.

Raising interest rates is a monetary policy instrument that generally helps to suppress demand in the economy, thereby helping to lower the inflation rate. The committee’s futures assessment will consider detailed information, including readings on public health, labor market conditions, inflationary pressures and expectations, and financial and other international developments, the US Fed statement said.

“Price stability is the responsibility of the Federal Reserve and serves as the cornerstone of our economy. Without price stability, the economy works for no one. Specifically, without price stability, we would expect strong labor market conditions.” It benefits everyone, US central bank President Jerome Powell said in his opening statement after the latest monetary policy review meeting.

Powell said the central bank is taking our policy stance to a level that will be restricted enough to bring inflation back to 2 percent. “We remain extremely attentive to the risks that high inflation poses to both sides of our mandate, and we remain strongly committed to returning inflation to our 2 percent objective,” Powell later said in his opening statement.

On slowing the pace of rate hikes, the Speaker said: “At some point, as the monetary policy stance tightens, it would be appropriate to slow down the pace of growth while we assess whether our cumulative policy adjustments will be possible.” and how are inflation affecting the economy.”

He said a restrictive policy stance would need to be maintained for some time to restore price stability and a historical record strongly cautions against premature loosening of the policy.



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