Economy

Rupee falls 7 paise to 74.71 against the US dollar, extending its losses for the third day

The rupee dropped for the third day in a row on Thursday, dropping 9 paise to end at 74.71 against the US dollar, as domestic equities slumped, weighing on forex market confidence.

The US dollar surged versus other Asian currencies as minutes from the most recent Federal Reserve meeting indicated that monetary policy would be tightened in the future.

According to minutes released on Wednesday, Federal Reserve officials discussed tapering at a recent meeting, with some members indicating that the economic recovery was speeding up.

The majority of members, on the other hand, agreed that the US economy had not yet met the central bank’s considerable additional progress threshold for any significant policy shift.

Lower crude prices, on the other hand, have restricted currency losses, according to forex traders.

On the interbank foreign exchange market, the rupee opened weak at 74.75 per dollar. It traded in a range of 74.84 to 74.65 versus the dollar during the session before finishing at 74.71.

On Wednesday, the rupee was trading at 74.62 against the US dollar.

The BSE Sensex sank 485.82 points, or 0.92 percent, to 52,568.94, while the broader NSE Nifty fell 151.75 points, or 0.96 percent, to 15,727.90.

“As a result of risk aversion, the Indian rupee, like other Asian currencies, fell in value. The dollar surged after the release of the FOMC minutes. “In the United States, long-term Treasury yields have continued to decrease, with the benchmark 10-year yield falling to 1.27 percent, indicating that the market expects lower inflation and slower growth in the future,” said HDFC Securities Research Analyst Dilip Parmar.

The forex market, on the other hand, has bucked the trend, with the dollar holding firm as traders increasingly focus on the expected timing for global monetary policy normalisation, according to him.

“Earlier, oil was the reason for the rupee’s loss for the third day in a row,” Parmar explained, “but risk aversion was the word of the game this time as local stocks lost roughly a percentage point in today’s trade.”

The dollar index slipped 0.18 percent to 92.47, which gauges the strength of the greenback against a basket of six currencies.

Brent crude futures, the global oil benchmark, declined 0.68 percent to USD 72.93 a barrel.

Foreign institutional investors were net purchasers in the capital market on Wednesday, according to exchange data, buying shares worth Rs 532.94 crore.

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