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Indian rupee gains against UAE dirham after US Fed rate hike

Firm trend in equities and weak American dollar in the overseas market supported the currency

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The Indian rupee strengthened against the US dollar on Thursday after the US Federal Reserve increased interest rate by 75 basis points and signalled more rate action to fight inflation.

According to forex dealers, a firm trend in the Indian equities and a weak American dollar in the overseas market supported the rupee.

However, unabated foreign fund outflows and surging crude oil prices capped the appreciation bias of the rupee, they added.

At the Indian interbank foreign exchange, the rupee opened strong at 78.06 against the US dollar, then inched lower to quote 78.07 (21.27 versus the UAE dirham), registering a rise of 15 paise over the last close.

It was moving in a very tight range in early deals.

In the previous session, the rupee had closed at a record low of 78.22 against the US dollar.

On Wednesday, the US Federal Reserve raised its key interest rate by 75 basis points, the largest hike since 1994, to a range of 1.5-1.75 per cent.

It also indicated more rate increases to cool down high inflation.

On the Indian equity market front, the 30-share Sensex was trading 575.21 points or 1.09 per cent higher at 53,116.60, while the broader NSE Nifty advanced 158.20 points or 1.01 per cent to 15,850.35.

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Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, slipped 0.21 per cent to 104.94.

Global oil benchmark Brent crude futures advanced 0.55 per cent to $119.16 per barrel.

Foreign institutional investors were net sellers in the capital market on Wednesday as they offloaded shares worth Rs35.31 billion, as per exchange data.

(With inputs from PTI)

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