Rupee falls 81 points on better-than-expected inflation

The Indian Rupee saw its best weekly performance since 201

8. The local unit appreciated on Friday as the US dollar declined after better-than-expected inflation data, reducing hopes of a further move by the US Federal Reserve. Besides, a strong rally in domestic equities coupled with continued foreign fund inflows further boosted the rupee’s performance.

on interbank forex MarketThe rupee ended 81 points lower at 80.7950 against the US dollar. This led to an increase of 2% in the rupee during the week from November 7 to November 11.

last day, Rupee Closed at 81.8075 against the US Dollar.

Meanwhile, the US dollar slipped more than 2% overnight and extended its decline further on Friday. The greenback was struggling to swim above the $107 mark against a basket of world currencies. This will be the biggest one-day fall in the dollar since 2009 and the worst week since March 2020.

Jatin Trivedi, VP Analyst, LKP Securities, said, “The rupee traded stronger with gains of over 1% as the dollar fell to a one-day high since 2009, sending other currencies higher. The US Weak CPI in the U.S. pushed the money market on the positive. Try it.”

Broadly, Asian currencies gained momentum against the dollar as Treasury yields declined and US equities saw strong buying. The benchmark 10-year Treasury yield was lower at 3.811%.

US inflation figures stood at 7.7 per cent in October for the fourth straight month, the lowest level since January this year. In June of this year, the country’s consumer price index posted its biggest increase in 40 years at 9.1% — which prompted the Fed to increase its key rates aggressively while maintaining an aggressive stance.

Recently, the US Fed raised policy rates by a fourth of 75 basis points to 3.25-4%, from 3-3.25% earlier. The FOMC said last week that they remained committed to easing inflationary pressures and therefore maintained their aggressive approach to monetary policy.

Now the hopes of a smaller rate hike by the Fed have taken the rounds and caused investors to raise more equity and turn the dollar to a safe haven.

Meanwhile, Devang Mehta, Head of Equity Advisory, Centrum Wealth, said, “A lower-than-expected inflation print in the US triggered a rally in global equity markets. The US dollar also fell against rival currencies, while US bond yields rose sharply. fell, as investors appreciated the prospects for less aggressive moves by the US Federal Reserve.

According to a Reuters report, Goldman Sachs has prepared for the Fed to slow the pace of rate hikes by 50 bps in December and by 25 bps in February and March.

Coming back to the Indian markets, Sensex ended 1,181.34 points or 1.95% higher at 1181.34, while Nifty 50 ended 321.50 points or 1.78% higher at 18,349.70. According to NSE data, FIIs made heavy buying 3,958.23 crore in Indian equities on Friday alone. Overall, FIIs jumped this week 6,329.63 crore in domestic equity.

On the outlook ahead, Mehta said, “While it is too early to predict, but if the global volatility eases and if the sentiment improves, India will see strong domestic inflows (around Rs 13000 crore of SIP) in addition to its already strong domestic inflows.” A substantial part of foreign institutional investment will be received every month).”

He further added, “Amidst the global dark clouds of high inflation, interest rates and fears of a global slowdown, our markets have been a silver lining with good macro and micro. Corporate profitability, credit growth, consumption (discretionary) along with the 4 Cs. and luxuries) and capex on a northward trajectory, the market will reward investors who keep the faith and are here for the long haul.”

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