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Rupee ended lower, Dollar higher vs. major currencies

Wednesday,   21-Sep-2022   04:02 PM (IST)

The Indian rupee ended the session lower at 79.9750/9850 levels compared to its opening at 79.79/80 levels after touching the low of 79.99/80.00 levels tracking the dollar index's strength as the U.S. Federal Reserve gears up for a hefty rate hike to tame inflation pressures. The rupee opened a tad lower at 79.79 and continued to toil lower through the session. Rupee traded in the range of 79.79-79.99 levels today. The mobilisation of troops by Russian President Vladimir Putin piled on more pressure on the rupee, already weighed by the surging dollar indexIndian government bond yields ended lower on Wednesday, as traders covered short positions ahead of the U.S. Federal Reserve policy decision. Indian shares dropped but, yet again, the losses were moderate relative to other Asian gauges. The S&P BSE Sensex ended 263 points, or 0.44 per cent, lower at 59,457. The NSE Nifty50 ended at 17,718, down 98 points or 0.55 per cent. In the forward segment 1mth, 3mth and 6mth annualized premia ended the day at 3.17%, 2.90% and 2.74% respectively.

The dollar jumped to a new two-decade high on Wednesday, as comments from Russia's President Vladimir Putin rattled markets ahead of another likely aggressive rate hike from the U.S. Federal Reserve. Putin ordered Russia's first mobilisation since World War Two, warning the West that if it continued what he called its "nuclear blackmail" that Moscow would respond with the might of all its vast arsenal. The news propelled the dollar index, which measures the greenback's value against other major currencies, more than 0.5% higher to 110.87 - its highest level since 2002. European currencies bore the brunt of selling in foreign exchange markets as Putin's comments exacerbated concern about the economic outlook for a region already hit hard by Russia's squeeze on gas supplies to Europe. Sterling, which was down 0.4%, fell to a fresh 37-year low of $1.1304 even before Putin started speaking. Later on Wednesday, the Federal Reserve is expected to lift interest rates by three-quarters of a percentage point for a third straight time and signal how much further and how fast borrowing costs may need to rise to tame a potentially corrosive outbreak of inflation. The policy decision, due at 1800 GMT, will mark the latest move in a synchronized policy shift by global central banks that is testing the resilience of the world economy and the ability of countries to manage exchange rate shocks as the value of the dollar soars. The dollar index is up almost 16% this year and set for its biggest annual jump since 1981. Analysts said the backdrop of heightened geopolitical uncertainty only added to dollar strength.