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Business News/ News / India/  Rupee hits fresh low vs US dollar, may slide to ‘84 levels soon’
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Rupee hits fresh low vs US dollar, may slide to ‘84 levels soon’

Rupee-US dollar rate: We expect Indian currency might show some more weakness in coming days, says analyst

The rupee today fell to 83.06 vs US dollar. A customer withdraws Indian rupee banknotes from an ATMPremium
The rupee today fell to 83.06 vs US dollar. A customer withdraws Indian rupee banknotes from an ATM

The Indian rupee fell to 83.06 in early trade today  as the surge in Treasury yields and the dollar index fuelled a broader decline in Asian currencies and equity markets. The rupee had hit a record low of 83.02 in the previous session. Asian equities tumbled today, tracking a sell-off on Wall Street, while the dollar regained its strength as surging inflation and interest rate hikes fears returned to the fore.

The selloff in U.S. Treasuries resumed on Wednesday, pushing near-maturity and longer-maturity Treasury yields to fresh multi-year highs. Yields had spiked despite a weak U.S. housing report.

The yield on the 10-year U.S. Treasury note touched a fresh 14-year high, brushing off a weak housing report. US 10-year yields were up at 4.139%.

“After consolidating in the range of 82 to 82.70 for 8 trading sessions, the Rupee all of sudden jumped to 83 levels. The show began in the last one and a half hours on Wednesday when it depreciated by 60 paise from 82.43 to 83.03. Moving forward, this kind of volatility could become a new normal as both domestic and global factors will keep on playing. As the pair is once again trading into unchartered territory, a psychological level of 83.50 and then 84 will act as resistances. On the flip side, the previous high near 82.70 will act as strong support for the pair," said CR Forex Advisors in a note. 

“Globally, equities are again under pressure after a fresh jump in US yields and another round of escalation over the Russia-Ukraine war. On the oil front, Joe Biden’s battle against higher oil prices continues after his administration announced the release of another 15 million barrels of oil from the Strategic Petroleum Reserve (SPR) extending the release through December," the forex advisory firm added. 

Oil prices were mixed after rallying Wednesday in reaction to a drop in US petroleum stockpiles, and despite President Joe Biden's decision to release 15 million barrels from US strategic reserves.

The bets on the US Fed to continue hiking rates aggressively got a boost after Minneapolis Fed President Neel Kashkari said underlying inflation pressures probably have not peaked yet.

The rise in yields and safe-haven demand catapulted the dollar index back to above the 113-levels.

Analysts forecast further weakness in rupee. “We expect rupee might show some more weakness in coming days. We might see 84 level very soon," said Rahul Kalantri, VP Commodities, Mehta Equities. (With Agency Inputs)

 

 

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Published: 20 Oct 2022, 09:06 AM IST
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