Forex Market News

Rupee Opens 33 Paise Lower At 67.76/USD

The Indian rupee has opened at 67.76 against the US dollar, down 33 paise from previous close after the Federal Reserve hiked interest rate and its commentary was more hawkish than expected. Mohan Shenoi of Kotak Mahindra Bank says as expected, US Federal Reserve hiked Fed Funds rate by 25 bps overnight.
The US central bank set a range of 0.50-0.75 percent and anticipated three rate hikes each in 2017, 2018 and 2019. However, the tone was more hawkish than what was priced in by the market resulting in further dollar strength across the board, Shenoi says.
He sees the trading range between 67.70 and 68 against the US dollar for the day. The US dollar strengthened across the board, its index hitting the highest level in nearly 14 years, further weighing on oil and other commodities priced in the US currency.
Johanna Chua of Citi says investors are likely to persist with long USD strategies against emerging market currencies, reloading these trades in the instances where they prematurely took profits, and joining the consensus where they were previously skeptical or were merely waiting for better entry levels.
Although there remains considerable uncertainty about President-elect Trump’s tax and trade policies, investors are likely to take comfort in the belief that that the majority of likely scenarios offer continued support to the Dollar, he feels.
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