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Rupee hit record low, Dollar higher vs. major currencies

Thursday,   22-Sep-2022   09:57 AM (IST)

The Indian rupee opened the day lower of 80.2850/2950 levels compared to its previous close at 79.9750/9850 levels and dropped further to record low of 80.4650/4750 levels in early deals after the U.S. Federal Reserve hiked rates by 75 basis points on Wednesday and indicated more large rate hikes. Asian currencies opened weaker, with the Chinese Yuan slipping below 7.10 to the dollar. Indian government bond yields higher tracking a spike in U.S. yields, after the Federal Reserve hike rate and signalled more increases to battle elevated inflation. Domestic equity markets opened lower after Fed's rate hike sent global markets into a tailspin. At 9.22 AM, the S&P BSE Sensex was trading at 59,230 down 227 point, while the broader Nifty50 was at 17,638 down 80 point. As per the technical indicators range for the USDINR pair may be 80.10-80.60 levels. Rupee has an immediate support at 80.48 levels. A breach of the same may see rupee at 80.58 followed by 80.65 levels. On the positive side rupee is likely to face resistance at 80.25 levels and if it is able to break the same then it may gain up to 80.00 levels followed by 79.88 levels.

The U.S. dollar pushed to a fresh two-decade high versus major peers on Thursday, propelled by the Federal Reserve’s hawkish outlook for interest rates and Russian President Vladamir Putin’s mobilisation of more troops for the war in Ukraine. The dollar index, which measures the currency against a basket of six counterparts including the euro and sterling, rose as high as 111.65 for the first time since June 2002. The greenback also notched new highs against regional currencies from the Aussie and New Zealand dollars to the offshore Chinese Yuan and the Korean won, as well as the Singapore dollar and Thai baht. The Fed issued new projections showing rates peaking at 4.6% next year with no cuts until 2024 after raising its target interest rate range by another 75 basis points overnight to 3.00%-3.25%, as was widely expected. The dollar was already supported by demand for the safest assets after Putin announced he would call up reservists to fight in Ukraine and said Moscow would respond with the might of all its vast arsenal if the West pursued what he called its “nuclear blackmail” over the conflict there. The two-year U.S. Treasury yield reached a fresh 15-year high of 4.132% in Tokyo trading. The euro weakened to a new 20-year trough of $0.9807, before trading 0.23% down on Wednesday at $0.9812. The dollar rose 0.23% to 144.44 yen, edging back toward the psychological 145 mark where it was rebuffed two times this month. It hit a 24-year high of 144.99 on Sept. 7. A divergence in monetary policy is at the root of the dollar-yen’s climb, with the Bank of Japan widely tipped to stick to ultra-easy policy settings later in the day. The Bank of England also announces policy on Thursday, with markets split on whether a 50 or 75 basis point hike is in the offing. Sterling fell to a fresh 37-year low of $1.1225, and last changed hands at $1.1233, a 0.3% decline from the previous session. The Aussie declined 0.63% to $0.65915 after having touched $0.65895, its lowest since May 2020. Liquidity in the currency may be thin with Australia observing a public holiday.