MUMBAI: The rupee closed at 82, down 89 paise. 73 against the dollar as improved US economic data led the greenback to surge against most currencies. The Federal Reserve of the United States is more likely to keep interest rates high for a longer period of time in order to contain inflation if the economy performs better. As global funds are drawn to the United States, higher rates cause the dollar to appreciate.
The rupee's sharpest decline since September 2022 was 89 paise. The Indian rupee was last at this value on January 3, 2023. The rupee weakened last week after the US Federal Reserve increased rates by 25 basis points (100bps = 1 percentage point). Since January 10, the rupee has been trading below 81 levels.
“On the back of strong US non-farm payroll data, what we are seeing is a reversal of the weakness of the dollar. Ashhish Vaidya, head of treasury at DBS Bank, stated, "Hiring in terms of non-farm payrolls increased 517,000 in contrast to an expected increase of 186,000."
“This is more of a rise in the dollar index rather than a weakness in the rupee or a risk-off sentiment in global markets. Vaidya stated, "There is a possibility that the rupee may breach 83 if the dollar continues to strengthen."
Due to Adani Enterprises' cancellation of the follow-on public offer, some bankers stated that outflows were anticipated as investors who had brought in forex would return.