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Rupee sinks to fresh record low against dollar after Fed rate hike

The rupee depreciated to a record low of 80.28 against the US dollar on Thursday after the Fed announced a 75 basis point hike, along expected lines, and its Chair Jerome Powell said there is no painless way to bring down inflation.

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By Asmita Pant  September 22, 2022, 4:02:09 PM IST (Updated)

2 Min Read
Rupee sinks to fresh record low against dollar after Fed rate hike
The rupee depreciated by as much as 88 paise to close at a record low of 80.86 against the US dollar on Thursday after the Federal Reserve announced a hike of 75 basis points in the key interest rate — along expected lines. The greenback stood firm at two-decade highs after the US central bank announcements, putting pressure on the rupee.


Weakness on Dalal Street amid a global sell-off also hurt the rupee, though a fall in crude oil rates lent some support.

Wednesday's policy announcements mark a third back-to-back increase of 75 basis points in the key interest rate, which stands in the range of 3-3.25 percent. Fed Chair Jerome Powell said there is no painless way to bring down inflation.

The US central bank's hint at more of sharp rate hikes means an aggressive pace of policy tightening heightening the risk of a recession.

Global crude oil prices fell as worries of global economy cast a shadow over fuel demand.

Brent crude and WTI futures dropped 0.6 percent each to $89.3 and $82.4 a barrel respectively.

The dollar index — which measures the US currency against six peers other than the rupee — hit a 20-year high of 111.5.

"As the FOMC dust settles, its over to the BoE, the SNB, the BoJ and the RBI policies now. Though not a roller coaster one, but another round of bumpy ride can be expected ahead of these central bank meetings," said Amit Pabari, Managing Director at CR Forex Advisors.

The market expects a 40-basis-point hike by the RBI at its meeting scheduled at the end of the month.

"If the RBI lets the rupee on its free course in line with the global peers, levels of 80.5-81 shall be shortly seen," Pabari added.

Indian equity benchmarks Sensex and Nifty50 fell after a gap-down start on Thursday.

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