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Rupee concludes substantially weaker ahead of Fed rate-hike

21 Sep 2022 Evaluate

Indian rupee concluded substantially weaker against dollar on Wednesday on increased demand for the greenback from importers and banks. Traders were cautious ahead of the US Federal Reserve's meeting outcome. Third 75-basis-point rate hike by the Federal Open Market Committee is widely expected. Sentiments were also fragile as Asian Development Bank (ADB) has slashed India's economic growth projection for 2022-23 to 7 per cent from 7.2 per cent earlier, citing higher than expected inflation and monetary tightening. Meanwhile, Reserve Bank of India will conduct an overnight variable rate repo auction for 500 billion Indian rupees ($6.25 billion) on Thursday. India's banking system liquidity slipped into deficit for the first time in more than three years. The deficit stood at 218.73 billion rupees as on Tuesday. On the global front, dollar jumped to a new two-decade high on Wednesday, as comments from Russia's President Vladimir Putin rattled markets ahead of another likely aggressive rate hike from the U.S. Federal Reserve.

Finally, the rupee ended at 79.96 (Provisional), weaker by 22 paisa from its previous close of 79.74 on Tuesday. The currency touched a high and low of 80.01 and 79.79 respectively.

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