Rupee edges closer to 80 per US dollar, hits record low for 4th straight day
Premium- Rupee dollar exchange rate: The US dollar continued its broad rise today
The Indian rupee today hit a record low for a fourth straight session as the US dollar continued its relentless rise against other major currencies. Foreign institutional investors continued to dump Indian equities, putting further pressure on the Indian currency.
The rupee today fell to new low of 79.74, breaching previous low of 79.66 it had hit in the previous session. The domestic currency depreciated to close at a record low of 79.62 against the US currency on Wednesday.
The US dollar continued its rise today after hotter-than-expected US inflation numbers hardened expectations for faster Federal Reserve policy tightening. The safe-haven appeal of US dollar has also been boosted by growing fears of a recession.
Data released on Wednesday showed consumer price index in the US rising to a 41-year high of 9.1% in June on the back of the supply chain bottlenecks partly caused by the Ukraine war and rising demand. A top Fed official, Atlanta Fed President Raphael Bostic, will be speaking at an event on Friday.
After the release of US inflation data, some market observers speculate that the Fed could hike borrowing costs a full percentage point at its next meeting this month. re easing slightly. On Friday, US jobs data showed robust numbers, suggesting the world's top economy was withstanding the rate hikes, giving the Fed more room for further increases.
The Fed's drive to tighten monetary policy continues to push the dollar higher, and on Wednesday it finally broke parity with the euro before easing slightly.
Extreme weather, the COVID-19 pandemic, lockdowns in China, and Russia’s invasion of Ukraine combined this year to distort global supply chains and send prices soaring, Moody's sent in a recent report.
The agency expects that energy and food prices could peak in the next few months and then trend lower but the assumption is based on the premise that the military conflict in Ukraine does not escalate.
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Brent crude futures are already down below $100 a barrel on expectations that rate hikes by global central banks will hurt economic recovery and thus hurt oil demand.
India's benchmark 10-year bond yield rose 5 basis points to 7.39% in a reaction to the U.S. inflation number. Expectations of the rising interest rate differential with the United States further dampening dollar inflows into emerging markets including India are hurting bonds and the rupee, traders said.
(With Agency Inputs)
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