Rupee dips 4 paise to 74.42 against USD

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Mumbai: The rupee on Thursday dipped 4 paise to close at 74.42 against the US dollar, tracking the strength of the greenback in the overseas market after hawkish US Fed minutes.

Investors saw minutes from the Federal Reserve meeting as a sign that the US central bank might hike interest rates faster than anticipated to cool inflation, and this could lead to outflows from the domestic markets, forex traders said.

According to minutes from the Fed’s December 14-15 policy meeting, policymakers believe the US job market is nearly healthy enough and ultra-low interest rates are no longer needed.

At the interbank foreign exchange market, the rupee opened weak at 74.44 and witnessed an intra-day high of 74.32 and a low of 74.51 against the US dollar.

The domestic unit finally settled at 74.42, down 4 paise over its previous close of 74.38.

The dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.05 per cent up at 96.22.

“Dollar gained against most Asian currencies as the market assessed the US Fed’s hawkish views. Rupee also felt the heat along with other Asian currencies and depreciated, but the pace was relatively lower as Reliance Industries received good response for their dollar bonds,” said Dilip Parmar, Research Analyst, HDFC Securities.

Reliance Industries Ltd, the nation’s most valuable company, on Thursday said it has raised USD 4 billion (around Rs 30,000 crore) in debt through the largest-ever foreign currency bond issuance by an Indian entity.

Moreover, growing concerns over the Omicron variant of coronavirus and its impact on economic recovery and firm crude oil prices weighed on the local unit.

Meanwhile, Brent crude futures, the global oil benchmark, advanced 0.39 per cent to USD 79.29 per barrel.

On the domestic equity market front, the BSE Sensex ended 621.31 points or 1.03 per cent lower at 59,601.84, while the broader NSE Nifty tanked 179.55 points or 1 per cent to 17,745.90.

Foreign institutional investors remained net buyers in the capital market on Wednesday, as they purchased shares worth Rs 336.83 crore, as per exchange data.

“Rupee quoted weak near 74.50 as COVID cases rise majorly in India’s capital and financial capital… Fed minutes update helped dollar climb, pressuring rupee to fall,” said Jateen Trivedi, Senior Research Analyst at LKP Securities.

Trivedi added that the “Rupee can be seen in the range of 74.35-74.75”.

According to Sriram Iyer, Senior Research Analyst at Reliance Securities, the rupee depreciated against the US dollar tracking losses in regional currencies and equities after minutes of the US Federal Reserve’s latest policy meeting indicated an early interest rate lift-off to counter inflation risks.

Asian equities and currencies dropped following the release of the minutes.

“Rupee continued to consolidate in a narrow range but volatility within the range remained elevated after FOMC meeting minutes released yesterday came in hawkish,” said Gaurang Somaiyaa, Forex & Bullion Analyst, Motilal Oswal Financial Services.

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