Rupee declines as US Fed's Powell stokes fears of high-interest rates
2 min read . Updated: 08 Mar 2023, 11:20 AM IST
Premium- Eleven of the 13 major sectoral indexes declined, with high-weightage information technology shedding 0.7%
The rupee on Wednesday declined as the US Federal reserve's chair Jerome Powell hinted that interest rates would be hiked this month too to rein over inflation.
On Wednesday morning, the Nifty 50 index shed 0.11% to 17,693.50, while the S&P BSE Sensex lost 0.12% to 60,146.41 as of 10:19 am (IST). Eleven of the 13 major sectoral indexes declined, with high-weightage information technology shedding 0.7%.
The currency had only just broken out of a narrow trading zone and strengthened past 82 per dollar for the first time in a month last Friday.
Stock and money markets in India were closed on Tuesday on account of Holi. On Wednesday, at 9 am (IST), the Sensex was down 291.80 points or 0.48% at 59,932.66, and the Nifty was down 79.40 points or 0.45% at 17,632.10.
US Federal Reserve Chair Jerome Powell's remarks on interest rate trajectory pushed the dollar higher. The probability of a 50 basis point increase in the federal funds' target rate at the March meeting has now risen above 70%. The Fed meeting is likely to happen around 21-22 March.
The dollar index, which gauges the greenback's strength against a basket of six currencies, rose 0.18% to 105.80 on Wednesday.
Powell said recent stronger-than-expected economic data in the United States suggests that the ultimate level of interest rates could be higher than previously anticipated.
"If the totality of the data were to indicate that faster tightening is warranted, we would be prepared to increase the pace of rate hikes," he said.
Besides, Asian stocks, European stocks, Australian and Canada markets also tumbled and currencies fell.