Rupee: Rupee weakens 13 paise against US dollar as Fed gets more hawkish

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NEW DELHI – The rupee and government bonds took a beating on Tuesday as fears of overseas investment outflows grew after US Fed Chairman Jerome Powell said the central bank could raise rates by 50 basis points repeatedly, if necessary, to fight inflation.

A continued rise in global crude oil prices, which is putting upward pressure on domestic inflation and the current account deficit, has also shaken market sentiment.

The partially convertible rupee opened at 76.28/$1 from 76.15/$1 at the previous close. The Indian currency, which was last at 76.38/$1, has moved in a band of 76.28-76.38/$1 so far in the day.

The 10-year government bond yield last traded 5 basis points at 6.83%. Bond prices and yields move in opposite directions.

Last week, the US Fed raised interest rates for the first time in four years, but the rupee held up against the dollar as Powell’s optimistic view on global growth boosted risk appetite. worldwide.

With his latest statements posing a risk to the global economic outlook, especially when coupled with soaring commodity prices due to the war in Ukraine, appetite for emerging market currencies such as the rupiah has decreases.

“Two culprits for risk aversion sentiment are a hawkish Fed and rising oil prices due to the war. to sell while importers have to wait for better levels,” said Anil Kumar Bhansali, Treasury Director at Finrex Treasury Advisors.

“I still have a feeling that by March 31, importers will have a chance to cover their debts. For today’s currency imports expect 76.20/$1 and exports around 76.50 /$1.

The West Texas Intermediate (WTI) crude oil contract for April delivery added $7.42 or 7.1%, to settle at $112.12 a barrel. Brent crude for May delivery rose $7.69 or 7.1%, to close at $115.62 a barrel.

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