Rupee moves closer to 80, slips 18 places to 79.99 against the dollar
The rupee ended Thursday on the brink of 80 per dollar, just the technicality of a touch lower at 79.99 against the greenback, keeping it away from the key psychological level.
Bloomberg and Reuters reported that the partially convertible rupee closed at 79.87 per dollar, while PTI quoted the rupee at 79.99 to close after the deal.
A PTI report showed the rupee moved closer to an historic low of 80 per dollar as it fell slightly more than 18 paise to settle at 79.9975 on a rampant and stronger greenback. in foreign markets.
In the interbank forex market, the rupee started the day on a strong note and touched a high of 79.71 a dollar in early trading. However, the coin lost momentum after the dollar rose to a 24-year high against a basket of global currencies.
The rupee finally settled to an intraday low of 79.9975 against the dollar, down 18 places from the previous close of 79.81.
That marks the 27th time the coin has hit a lifetime low since Russia invaded Ukraine in late February and a record weak daily close this week.
“The Indian rupee became the regional average. The rupee closed at a record low for the fourth day in a row amid safe-haven demand for the dollar after the U.S. inflation surged to a 41-year high. Market rates are now Dilip Parmar, Research Analyst at HDFC Securities, telling PTI is pricing in aggressive rate hikes from the Federal Reserve.
The spot USD/INR rate delayed the 80 level in today’s session but is expected to break in the coming days. The pair has resistance at 80.90 after crossing 80 while support moves from 78.50 to 78.80 from 78.50, he noted.
PTI reports that some leading banks, such as the State Bank of India (SBI), have quoted prices above 80 levels to sell US dollars.
However, for the rupee, that is not the end of the frenzy. Fears now are that once the rupee breaks the $80 level, the drop could be even steeper, as a break of the key psychological ratio raises bets in favor of the subsequent free fall. , as we’ve seen since the rupee weakened beyond 77 per dollar, based on the pace of weakness.
“The rupee continues to come under pressure as the dollar strengthens against its major currencies. Today, it fell to an all-time low against the US dollar,” said Gaurang Somaiya, Forex & Bullion Analyst, Motilal Oswal Financial Services.
Hat news comes after another historical moment in the currency market.
Indeed, the euro fell below parity to a 20-year low for the first time on Wednesday; while the coin recovered some of its losses early on Thursday, it soon lost its appeal and fell right below $1 due to fears of an energy crisis and political instability in Italy.
“Clearly there is a broader preference for the dollar in the market at the moment in light of the broader ongoing geopolitical uncertainty, pressure in Europe from the energy supply situation and expect interest rate hikes in the US,” Shaun Osborne, chief FX strategist at Scotiabank, told Reuters.
The greenback extends strong gains on expectations of stronger interest rate hikes from the Federal Reserve.
The dollar also rose to a 24-year high against the Japanese yen as the Bank of Japan maintained a dovish stance in contrast to the hawkish global moves of its central bank peers.
Bloomberg reports that the swaps markets show traders are now pricing in a significant probability that the Fed will make a 100 basis point increase in July following hotter-than-anticipated inflation data.
“The interesting aspect of the CPI numbers is the scope for the upside,” Shane Oliver, chief economist at AMP, told Reuters. 90% of the US CPI components have increased by more than 3%.
That sent the dollar soaring to a 20-year high, emerging as a preferred savings haven amid growing economic risks.
Market valuations on the Chicago Mercantile Exchange’s (CME) Fed tracker suggest a 78% chance of a 100-basis gain. However, Mr. Oliver said this could only be a knee-jerk reaction to high inflation.
“I think the Fed will stick to 75 – still a high number – if they get to 100, it looks like they’re panicking. Only time will tell, though; the Fed has an unconditional commitment to it. reduce inflation again. ,’ he added.
A widely accepted separate The indicator of a pending recession is pointing to one of the horizon lines.
While Treasury yields rose along the curve, the gains were larger at the end of the period.
The US two-year yield, which reflects short-term interest rate expectations, rose to 3.121%, just behind a four-week high overnight, widening the gap with the more than 10-year long-term benchmark yield. , at 2.9558 percent. cents, according to Reuters.
The decline in the yield on longer-term debt that is lower than the yield on short-term debt of the same credit quality is called an inverted yield curve. An inverted curve, also known as a negative yield curve, has previously been shown to be a relatively reliable predictor of recession.
The so-called yield-curve inversion, when short-term rates are higher than long-term rates, is generally considered a sign of a recession, and the gap between the two has hit 25 basis points in early Asia, the spread. difference between 75 basis points and 100 basis points the Fed raises rates.
One of the US bond market’s most widely watched indicators of potential recession risk has reached levels last seen in 2007; Bloomberg reported and added that the degree of inversion of the Treasury curve was last seen in 2007, just before the global financial crisis.
