Rupee falls 19 paise to 79.13 against U.S. dollar

Photo used for representational purpose only. File

Photo used for representational purpose only. File | Photo Credit: RAGHUNATHAN SR

The rupee declined 19 paise to close at 79.13 (provisional) against the U.S. dollar on Thursday, as the hawkish stance of the U.S. Federal Reserve increased the possibility of another aggressive rate hike this month.

At the interbank foreign exchange market, the local currency opened at 79.05 and finally ended at 79.13, down 19 paise over its previous close.

On Wednesday, the rupee closed at 78.94.

"Rupee opened on a flat note but started to come under pressure despite measures announced by the RBI," said Gaurang Somaiya, Forex & Bullion Analyst, Motilal Oswal Financial Services.

The RBI on Wednesday raised overseas borrowing limits for companies and liberalised norms for foreign investments in government bonds as it announced a slew of measures to boost foreign exchange inflows in efforts to curb the fall of the rupee.

The central bank had also said it has been closely and continuously monitoring the liquidity conditions in the forex market and has stepped in as needed in all its segments to alleviate dollar tightness with the objective of ensuring orderly market functioning.

Forex traders said the U.S. Federal Reserve's minutes of the meeting held last month indicated a hawkish stance and a rate hike of 75 basis points is likely in July. The minutes were released on Wednesday.

"Dollar rose against its major crosses after the minutes reaffirmed Fed's intent to get prices under control to address stubborn inflation," Somaiya said, adding, "We expect the USD-INR to trade sideways but with a positive bias and quote in the range of 79.05 and 79.80."

The dollar index, which gauges the greenback's strength against a basket of six currencies, fell 0.21% to 106.86.

Brent crude futures, the global oil benchmark, advanced 0.81% to $101.51 per barrel.

Foreign institutional investors were net sellers in the capital market on Wednesday as they offloaded shares worth ₹330.13 crore, as per stock exchange data.

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Printable version | Aug 12, 2022 7:00:30 pm |