Indian rupee slips against UAE dirham after hawkish US Fed stance

On Wednesday, the rupee surged 20 paise to close at 74.38 against the US currency.

PTI file
PTI file

A Staff Reporter

Published: Thu 6 Jan 2022, 9:50 AM

Last updated: Thu 6 Jan 2022, 9:52 AM

The Indian rupee declined by six paise to 74.44 against the US dollar (20.28 against the Emirati dirham) in early trade on Thursday, tracking the strength of the American currency after hawkish US Federal Reserve minutes.

Investors saw minutes from the Fed meeting as a sign that the US central bank might hike interest rates faster to cool inflation and this could lead to outflows from the domestic markets, forex traders said.

According to minutes from the Fed's December 14-15 policy meeting, policymakers believe the US job market is nearly healthy enough and ultra-low interest rates are no longer needed.

At the Indian interbank foreign exchange, the rupee opened at 74.44 against the dollar, registering a decline of six paise from the last close. The rupee also witnessed a high of 74.34 in the initial deals.

On Wednesday, the rupee surged 20 paise to close at 74.38 against the US currency.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, rose by 0.02 per cent to 96.19.

The Indian Rupee opened flat to marginally weak on Thursday, tracking the strength of the dollar and weak Asian and emerging market peers, Reliance Securities said in a research note.

“Additionally, quicker than previously anticipated rate hike from the US Fed could witness outflows from the domestic (Indian) markets and could weigh on sentiments” it added.

Moreover, growing concerns over the Omicron variant of coronavirus and its impact on economic recovery as well as firm crude oil prices weighed on the rupee.

Global oil benchmark Brent crude futures fell by 1.35 per cent to $79.71 per barrel.

On the Indian equity market front, the 30-share Sensex was trading 717.2 points or 1.19 per cent lower at 59,505.95, while the broader NSE Nifty slipped 198.85 points or 1.11 per cent to 17,726.40.

(with inputs from PTI)

More news from Markets