Rupee Declines 11 Paise To Close At 82.03 Against US Dollar

The dollar index was trading 0.13 per cent higher at 105.75. (File)

Mumbai:

The rupee depreciated 11 paise to close at 82.03 (provisional) against the US currency on Wednesday as a strong dollar in the overseas market weighed on investor sentiments.

Forex traders said the Dollar index gained strength after US Federal Reserve Chairman Jerome Powell reignited worries of a 50-bps rate hike in the Federal Open Market Committee (FOMC) meeting to be held on March 21-22, 2023.

At the interbank foreign exchange market, the rupee opened at 82.25 against the greenback and closed at 82.03 (provisional), registering a fall of 11 paise over its previous close of 81.92 on Monday.

Stock and money markets were closed on Tuesday on account of Holi.

During the session, the domestic unit witnessed an intra-day high of 81.98 and a low of 82.29 against the American dollar.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.13 per cent higher at 105.75.

“Powell said that the latest economic data released in the US are stronger than expected. He also added that the US central bank would be prepared to increase the pace of rate hikes if the totality of the data were to indicate that faster tightening is warranted.

“Odds of a 50-bps rate hike rose to 70 per cent from 24 per cent the previous day,” said Anuj Choudhary – Research Analyst at Sharekhan by BNP Paribas.

Shorter duration US Treasury yields also surged, which led the US dollar to a three-month high. Markets now expect terminal rates to be higher than previous estimates of 5.4 per cent, Choudhary added.

Global oil benchmark Brent crude futures declined 0.16 per cent to $83.16 per barrel.

“We expect the rupee to trade with a negative bias on risk aversion in global markets following Powell’s testimony,” Choudhary said.

A surge in the US dollar and weak risk assets may also put downside pressure on the rupee. However, a weak tone in crude oil prices and FII inflows may support the rupee at lower levels, Choudhary added.

The 30-share BSE Sensex ended 123.63 points or 0.21 per cent lower at 60,348.09, while the broader NSE Nifty declined 42.95 points or 0.24 per cent to 17,754.40.

Foreign Institutional Investors (FIIs) were net buyers in the capital markets on Monday as they purchased shares worth Rs 721.37 crore, according to exchange data

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