Rupee Weakens And Nudges Closer To 76 On Dollar Strength And Stocks Slump

The rupee weakened on Wednesday, snapping a three-day winning streak, as hawkish Fed comments bolstered the dollar to a near 2-year high.

The rupee weakened on Wednesday, snapping a three-day winning streak, as hawkish comments from US Federal Reserve officials bolstered the dollar to a near 2-year high, and worries over surging domestic inflation pushed stocks to extend losses for a second session.

According to Reuters, the rupee weakened to 75.81 against the dollar. The PTI reported that the rupee opened at 75.50 against the American currency at the interbank foreign exchange market but lost ground and settled at 75.76, down 47 paise from the previous close. On Tuesday, the rupee had climbed 24 paise to close at 75.29 against the US dollar.

"The Rupee has seen a sharp reversal of its weekly gains after the US dollar index rallied to hit fresh swing high of 99.75 after Federal Reserve governor Brainard said, she expects methodical interest rate increases and rapid reductions to the Fed's balance sheet to bring U.S. monetary policy to a 'more neutral position' later this year," wrote the Currency Desk of Emkay Global Financial Services, in a research note.

"The comments were in line with the point that the Fed is poised to get more aggressive in its upcoming meetings. The markets will be keenly awaiting the FOMC March meeting minutes, which will be released tonight. Meanwhile the European union continues to pile on fresh sanctions on Russia as they sanctioned four key Russian banks yesterday. The EU chief also said that EU must sanction Russian oil and gas soon or later. The rupee will lose more ground and test 75.80 levels until 75.50 holds. A reversal towards 75.20/75.00 will be seen below 75.50,” the note added.