Currency watch: Rupee sinks 47 paise to close at 88.69 against dollar; Fed’s hawkish tone, weak markets weigh on sentiment

The rupee slumped 47 paise to end at 88.69 against the US dollar on Thursday, pressured by a stronger greenback, weak domestic equities, and hawkish commentary from the US Federal Reserve that dented global risk appetite.Traders said the local unit came under sustained pressure through the session amid month-end dollar demand from oil marketing companies (OMCs) and persistent foreign fund outflows, PTI reported.At the interbank foreign exchange market, the rupee opened at 88.37 and touched an intra-day low of 88.74 before settling at 88.69, down 47 paise from Wednesday’s close of 88.22.The Federal Reserve cut interest rates by 25 basis points in its latest Federal Open Market Committee (FOMC) meeting, but Chair Jerome Powell signalled that further easing in December was “not a foregone conclusion.” His remarks, seen as hawkish, reduced bets on additional cuts this year and pushed US Treasury yields higher, boosting the dollar’s strength against emerging-market currencies.“We expect the rupee to trade with a slight negative bias on a strong US dollar, weak domestic markets, and a hawkish Fed. Month-end dollar demand from OMCs may also weigh on the rupee,” said Anuj Choudhary, Research Analyst, Currency and Commodities, Mirae Asset Sharekhan.Choudhary, however, added that falling crude prices could lend some support at lower levels. “USDINR spot price is expected to trade in a range of 88.45 to 89,” he said.The dollar index, which measures the greenback’s strength against a basket of six major currencies, slipped marginally by 0.09% to 99.12. Brent crude futures, the global oil benchmark, declined 0.65% to $64.50 per barrel — a move that could help ease India’s import bill pressures.Domestic markets extended losses, adding to the rupee’s woes. The Sensex fell 592.67 points to close at 84,404.46, while the Nifty dropped 176.05 points to 25,877.85. Foreign institutional investors offloaded equities worth Rs 3,077.59 crore, according to provisional exchange data.With a combination of global uncertainty, profit-taking in equities, and cautious Fed signals, analysts expect the rupee to remain range-bound with a mild downward bias in the near term.