Fri, 07 Oct 2022 12:53 PM IST
THE INDIAN rupee weakened past 82 per dollar to hit a record low on Friday after a chorus of U.S. Federal Reserve officials reiterated the need for higher interest rates, while the Reserve Bank of India likely stepped in to curb the currency's slide.
The rupee was trading at 82.32 per dollar by 0436 GMT, compared to its previous close 0f 81.88. The currency had on the interbank trading system fallen to a low of 82.28 on Thursday due to huge dollar demand.
The RBI is suspected to be selling dollars through state-run banks at around 82.30 levels to stem the rapid slide in the currency. The rupee had edged close to 82 levels several times in the past few sessions but had not managed to breach it. "The rupee is poised to remain under pressure in the near-term as fears of tighter monetary policy in the U.S. continue to fuel dollar bids," said Sakshi Gupta, principal economist at HDFC Securities.
Gupta expects more RBI interventions to arrest the slide somewhat. A wider trade deficit, uptick in oil prices and lack of dollar inflows on the equities side are also some other key risks for the currency, said Sajal Gupta, head of forex and treasury at Edelweiss Securities. Meanwhile, a Reuters poll found that the rupee was likely to trade near its record low against the greenback even beyond this year.
The dollar index gained as chances of a 75 basis point hike by the Fed at its November meeting went up to 76 per cent. Overnight, a slew of Fed officials reinforced the view that the central bank was nowhere near done with its hiking cycle to bring down inflation, and that rates are expected to go up further.
The rupee has witnessed a swift decline after it dropped below 80, a level, traders said, the RBI was looking to protect. The slide from 80 to current levels has come in just eleven trading sessions.