Rupee plunges 48ps to 88.70/$

Mumbai: The rupee depreciated 48 paise to close at 88.70 (provisional) against the American currency on Thursday on a strong US dollar, weak domestic markets, and a hawkish US Fed. Forex traders said the US Federal Reserve slashed interest rates by 25 bps in its Federal Open Market Committee (FOMC) meeting.

However, Fed Chair Jerome Powell’s commentary was hawkish, trimming rate-cut expectations for December. Moreover, month-end dollar demand from Oil Marketing Companies (OMCs) and foreign fund outflows may also weigh on the rupee.

At the interbank foreign exchange market, the rupee opened at 88.37, and later fell to an intra-day low of 88.74. The local unit finally settled at 88.70 (provisional) against the greenback, registering a loss of 48 paise from its previous close.

On Wednesday, the rupee appreciated seven paise to close at 88.22 against the US dollar. “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.

The US Fed cut rates by 25 bps, as expected. However, Fed Chair Jerome Powell said the December cut was not a foregone conclusion, given inflation remains above target and labour-market uncertainties persist.