Dollar vs Rupee: The Federal Reserve’s policymakers reiterated their aggressive stance on rate hikes on Friday, sending the dollar on course for its largest weekly gain in a month. Despite this, the remained stable. rupee.
According to Bloomberg, the rupee was last trading at 81.6875 to the dollar, up from its previous close of 81.6475.
Head of Treasury at Finrex Treasury Advisors
“Most Asian currencies have been stable since morning and the dollar index consolidated at 106.60 levels. The rupee remained on a weaker side for most part of the day, trading in a range of 81.52 to 81.78,” said Anil Kumar Bhansali, Head of Treasury at Finrex Treasury Advisors.
The rupee lost 6 paise to provisionally close at 81.70 against the US dollar, according to PTI.
According to foreign exchange merchants, oil importers and other businesses have a constant need for dollars.
According to CTBC Bank Head of Treasury Ritesh Agarwal, “Any dips in USD/INR are being bought out this week.”
After being in a losing position for a while, importers started covering when the pair dropped to around 80.5 on Monday, according to Mr. Agarwal.
Dollar vs Rupee: Expectations
He predicts that the rupee could drop below 82 as early as next week. In mid-September, the rupee last traded in the 80-handle range.
The US dollar was unchanged on Friday, but it has gained about 0.4% this week, recouping some of the 4% loss it suffered last week after a lower-than-expected US inflation data caused one of the currency’s biggest weekly declines in decades.
The most recent US central bank official to reject market expectations for a slowdown in interest rate increases was James Bullard, President of the St. Louis Fed, who said that even under dovish assumptions, the funds rate would need to rise from its current level of 3.75–4% to at least 5–6.25% in order to reduce inflation.
He said more pessimistic forecasts would advise it to increase above 7%.
Inflation battle
However, data from the money markets indicates that investors now expected the US interest rate to peak at 5% by the middle of next year.
“The dollar may continue to consolidate for a little while longer, according to our forecast, before beginning to appreciate again before the year’s conclusion. Markets will continue to be quite responsive to Fed speakers “Francesco Pesole, a strategist at ING, said Reuters.
“Post-CPI comments have so far shown some lingering caution on the fight against inflation as the majority of Fed members tried to cool the market’s euphoria regarding an impending dovish pivot. An interest rate peak of 5.00% in the first half of 2023 has now been fully priced back into the futures market “Added he.
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