Indian Rupee Stalls as US Dollar Strengthens

Indian Rupee Stalls as US Dollar Strengthens

VoM News Desk | September 27, 2023 | 11:35 AM IST | Breaking News | Follow on Google News

Indian Rupee Stalls as US Dollar Strengthens

The Indian rupee faced a steady start against the US dollar on Wednesday, with several factors contributing to its flat opening. Amidst rising US Treasury yields and increasing crude oil prices, the local currency opened at 83.23 against the dollar, unchanged from its previous close.

Dollar Index Surges, Treasury Yields Remain Elevated

The dollar index stood at 106.24, nearing its highest level since November 2022, exerting pressure on the Indian rupee. Additionally, the 10-year US Treasury yield, though slightly lower in Asia at 4.51%, remained close to its highest level since October 2007. The rupee had concluded the previous day 8 paise lower at 83.23 per dollar, still grappling with the impacts of the soaring US dollar. It’s worth noting that in October 2022, the rupee had recorded its all-time low of 83.29. Meanwhile, Asian currencies saw a general weakening trend, with the Korean won being the hardest hit.

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Hawkish Federal Reserve Comments

The surge in US Treasury yields was attributed to hawkish remarks made by some Federal Reserve officials. Neel Kashkari, President of the Minneapolis Federal Reserve Bank, stated on Tuesday that he believed there was a 40% chance of the US needing “meaningfully” higher interest rates to combat inflation. These comments have further strengthened the US dollar’s position. ICICI Direct noted, “USDINR is expected to move higher towards 83.40 on the back of a strong dollar. The hawkish comments from the Fed members would also support the dollar in maintaining its gains. Furthermore, equity outflows would continue to exert downward pressure on the rupee.”

Caution Ahead of Key Economic Data

Investors are expected to tread cautiously as they await key economic data from the United States, including GDP and core PCE figures, scheduled for release later in the week. The outcome of these reports could significantly influence the direction of the rupee against the dollar in the short term.

Crude Oil Prices Add to Rupee’s Woes

In addition to the dollar’s strength and rising Treasury yields, the Indian rupee also faced pressure from surging crude oil prices. Brent futures increased by 0.94% to reach $94.84 per barrel, while US West Texas Intermediate (WTI) crude climbed 0.94% to $91.24 a barrel. These rising energy costs added to the challenges faced by the rupee, making it a challenging day for the Indian currency.

VoM News Desk

VoM News is an online web portal in jammu Kashmir offers regional, National & global news.