JOIN USRupee at record closing low on Ukraine war, Fed move
The Indian rupee closed at its lowest level ever against the US dollar on Wednesday after the mobilisation of troops by Russian President Vladimir Putin and ahead of a hefty rate hike in interest rates by the US Federal Reserve.
The rupee closed at 79.9750 per US dollar, down from 79.75 in the previous session, according to Reuters.
“An overall backdrop of risk aversion due to renewed concerns about the escalation of conflict in Ukraine, and strong gains witnessed in the greenback have pushed the Indian rupee on a lower trajectory ahead of another expected hefty rate hike by the US Fed,” said Sugandha Sachdeva, VP-Commodity & Currency Research, Religare Broking Ltd.
Sachdeva did not rule out the possibility of a further fall in the rupee.
Others were more optimistic and focused on the rupee's strength versus its regional peers.
“The rupee was one of the strongest currencies across emerging markets,” said Anindya Banerjee, VP, Currency Derivatives & Interest Rate Derivatives at Kotak Securities Ltd. "Reversal of FPI flows and lower oil prices have been the cause of the strength."
She expected the rupee to remain an outperformer across emerging markets.
The dollar index climbed to a two-decade high of 110.87, Reuters reported, adding that weak risk appetite and the Fed's interest rate outlook boosted demand for the greenback. The US central bank was expected to raise rates by 75 basis points in the day, the third straight hike of this size.
(With Reuters inputs)