Finance & Stock Market

Rupee ends lower under pressure from the stronger dollar and probable equity outflows.

By - 18 Jan 2024 02:12 AM

Pressured by anticipated equity outflows and the U.S. dollar index rising to a more than one-month high due to moderating expectations for U.S. rate cuts, the Indian rupee ended lower on Wednesday.The rupee closed at 83.1375 against the dollar, down 0.08% from the previous session's close of 83.07.In Asia hours, the dollar index reached its highest point since mid-December, 103.58. With a decline of 0.91%, the Korean won led all Asian currencies in decline.Federal Reserve Governor Christopher Waller on Tuesday said that while the U.S. is “within striking distance” of the Fed’s 2% inflation goal, the central bank should not rush to cut benchmark interest rates.The comments prompted investors to pare bets on aggressive rate cuts.”A combination of weakish China data and a pushback” by European Central Bank and Fed officials against early easing is weighing on risk sentiment and supporting the dollar, ING Bank said in a note.

In the meantime, data released on Wednesday indicates that China's economy grew marginally slower in the October–December quarter than anticipated. According to a foreign exchange trader at a private bank, pressure on the rupee on Wednesday came from dollar bids from foreign banks, probably acting on behalf of custodian clients.The blue-chip NSE Nifty 50 shed 2.09%, while the S&P BSE Sensex lost 2.23%. This is the highest percentage drop for both the indexes since June 2022.The rupee’s weakness is unlikely to “sustain a lot as the tilt or bias on the rupee remains positive”, Arnob Biswas, head of foreign exchange research at SMC Global Securities, said.Investors now await December U.S. retail sales data due later in the day, which is expected to show a month-on-month rise of 0.4%, up