The Indian rupee dipped against the U.S. dollar for the seventh straight day on Wednesday ahead of the conclusion to the Federal Reserve’s monetary policy decision.
The USD/INR rose to an intraday high of 73.3890 – hit its weakest since May 14 – against the U.S. currency from Tuesday’s close of 73.35. The rupee has lost 88 paise so far this month and weakened 60 paise in the seven trading sessions.
The dollar index, a measurement of the dollar’s value relative to six foreign currencies, fell 0.02% to 90.515. The index is expected to rise further after the relatively impressive US consumer price index data, which rose by 5% year-on-year in May– the highest since 2008.
The rupee was also under some pressure ahead of the Federal Reserve monetary policy meeting scheduled this week. Traders remain cautious ahead of the policy decision as any unexpected hawkish surprise would lift the greenback.
“Sentiments remained frail as the recent recovery in the US, the world’s largest economy, and upbeat inflation data raised hopes over a slightly hawkish approach and potential interest rate hike. Bets on shift in the monetary stance by the US Central Bank gave strengthen to the US currency. Strong demand for the dollar by importers and banks amid soaring Crude Oil prices undermined the domestic currency,” noted Manish Pargi, currency analyst at Angel Broking.
The benchmark BSE Sensex index ended down 271.07 points or 0.51% lower at 52,501.98, while the broader NSE Nifty fell 101.70 points or 0.64% to 15,767.55.
On the other hand, global oil benchmark Brent futures rose 0.27% to $74.19 per barrel. However, foreign institutional investors were net buyers in the capital market on Tuesday as they offloaded shares worth Rs 633.69 crore, as per provisional data.
The Indian rupee was one of Asia’s best performers, having risen 2.3% in May, but lost ground last two weeks. The USD/INR is expected to rise about 1% to INR 74.00 against the U.S. dollar rate over the coming year.