On Friday, the rupee lost value versus the US dollar and reached a new low as the local mood remained negative in the face of a fast surging dollar. The Federal Reserve has hinted at a longer-than-expected tightening cycle, which has caused the dollar to rise across the board in recent days.
Within the first few minutes of trading on Friday, the rupee hit a fresh intraday low. The local currency was trading at 81.13 at 09:25 IST. On Thursday, the rupee lost 1.1% of its value versus the dollar, ending the day at a historic low of 80.87 per dollar.
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Rupees currency Values
The yield on the benchmark 10-year bond last traded 7 basis points higher at 7.38 percent, continuing the government bonds’ severe losses from Wednesday. The movement of bond prices and yields is the opposite. Bond yields accelerated along with the rise in US Treasury yields.
“The gradually increasing dollar is helping the global risk-off to gain momentum. Capital flows into developing markets, particularly India, will be impacted by the dollar’s strengthening relative to all other currencies. The surge in India has been aided by the FPI’s return to buying since July. Due to FPIs becoming sellers in 5 of the last 7 days, this is now in danger.
When the US 10-year bond yield is above 3.7% and the dollar index is above 111, FPIs are unlikely to buy consistently. The market’s immediate outlook is negative. Before investing additional money, investors may want to wait and observe “said V K Vijayakumar, Geojit Financial Services’ chief investment strategist.
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Benchmark
On Friday, domestic benchmark indices fell precipitously as recession worries spread across investors worldwide. The BSE Sensex dropped 1,021 points to 58,099 to end the week down 1.26 percent or 742 points. It had dropped to this point on August 29.
On Friday, the NSE Nifty lost 302 points to close at 17,327. On a weekly basis, the index dropped 200 points or 1.16 percent. After the US Fed raised interest rates by 75 basis points on Wednesday night, the two indices fell today for the third time in a row.
The rupee had been outperforming other developing market currencies before Thursday’s dramatic decrease because of a restart of foreign equity investment, a drop in crude oil prices, and active market interventions by the RBI.
The rupee has suffered more recently than other emerging market currencies, raising the possibility that the central bank was giving the currency some time to adjust to the new reality of US interest rates remaining higher for longer. The RBI’s foreign exchange reserves are currently at a two-year low of about $550 billion following market interventions since late February.
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Indian Rupee Vs US Dollar
On Friday, the rupee lost value versus the US dollar and reached a new low as the local mood remained negative in the face of a fast surging dollar. The Federal Reserve has hinted at a longer-than-expected tightening cycle, which has caused the dollar to rise across the board in recent days.
Within the first few minutes of trading on Friday, the rupee hit a fresh intraday low of 81.25 against the US dollar. The local currency was trading at 81.13 at 09:25 IST. On Thursday, the rupee lost 1.1% of its value versus the dollar, ending the day at a historic low of 80.87 per dollar.
The rupee independently followed the global factors to reach its fair value yesterday, hence the absence of the RBI was felt. Insufficient liquidity in the banking system, which is currently in deficit, was one of the reasons the RBI was unable to stop the currency’s decline, according to CR Forex Advisors MD Amit Pabari.
According to what he wrote, “RBI’s intervention in the spot market could make the situation worse for the banking sector liquidity amid rising short-term interest rates.” According to CR Forex, the rupee could drop as low as 81.80–82.00 per dollar in the near future.
