Indian rupee ended considerably weaker against the US dollar on Thursday due to fresh demand for the American currency from banks and importers. Rupee sentiments were pessimistic after the US Fed hiked key interest rates by 25 basis points for the first time in a year in response to a strengthening US economy. Sentiments also remained dampened with industry body CII’s statement that India’s economic growth will see a ‘significant fall’ in the second half of the current fiscal on account of cash crunch following demonetisation. Meanwhile, investors were unable to get any respite with Chief Economic Advisor Arvind Subramanian’s word that the Indian economy is ‘well cushioned’ to absorb the impact of US Federal Reserve's rate hike. According to Subramanian, India is seen better equipped than other emerging market peers to weather the impact of higher U.S. interest rates because of its stronger economic growth and record high foreign exchange reserves of more than $300 billion.
Finally, the rupee ended at 67.83, 39 paise weaker from its previous close of 67.44 on Wednesday. The currency touched a high and low of 67.87 and 67.71 respectively. The Reserve Bank of India’s (RBI) reference rate for the dollar stood at 67.79 and for Euro stood at 71.15 on December 15, 2016. While the RBI’s reference rate for the Yen stood at 57.72, the reference rate for the Great Britain Pound (GBP) stood at 85.11.The reference rates are based on 12 noon rates of a few select banks in Mumbai.
