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Rupee ends weak on dollar demand from importers

06 Jan 2022 Evaluate

Rupee ended weaker against dollar on account of continued dollar demand from importers and banks. Sentiments were fragile as minutes from the Federal Reserve meeting signal that the US central bank might hike interest rates faster than anticipated to cool inflation, and this could lead to outflows from the domestic markets. According to minutes from the Fed's December 14-15 policy meeting, policymakers believe the US job market is nearly healthy enough and ultra-low interest rates are no longer needed. Traders were also worried as ICRA Ratings warned that the third wave of the pandemic is likely to shave 40 bps of the fourth quarter Gross Domestic Product (GDP) growth that may print in at 4.5-5 per cent. It said third wave of the pandemic has seen a massive spike in infections after the more infectious Omicron variant of the coronavirus appeared. Downfall in equity markets also impacted traders’ sentiments. On the global front, pound fell versus dollar and euro on Thursday, pulling back from some its recent gains in a dip driven by dollar strength following the release of more hawkish than expected Federal Reserve minutes.

Finally, the rupee ended 74.42, weaker by 4 paise from its previous close of 74.38 on Wednesday. The currency touched a high and low of 74.51 and 74.32 respectively.

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