Last week, the rupee recovered to 82.34 levels after hitting a new record low in the futures market due to the weakening of the dollar and the increase in risk appetite in domestic markets. The expectation that the Fed could pause the pace of rate hikes after its November meeting caused the dollar to lose some of its strength. A few authorities expressed a wish to soon decrease the rate of rate increases.
Sharp gains were, however, thwarted by the rise in crude oil prices. This week, the Indian Rupee is projected to lose value once more, reaching levels of 83.00, due to the rebounding dollar and gloomy market attitudes worldwide. Ahead of the US Federal Reserve’s monetary policy meeting and an increase in US Treasury yields, the dollar is strengthening.
Market participants predict that the Fed will increase interest rates by 75 basis points (4 bps) at its forthcoming meeting. The CME Fed Tool Watch predicts an 82.8% chance of a 75 bps rate increase in the November meeting. Better-than-expected US GDP numbers are also helping the currency regain its vigour.
After falling in the first half of the year, US GDP increased by 2.6% in the most recent quarter. Investors will continue to pay attention as the RBI’s extra meeting, scheduled for November 3rd, approaches. The central bank will provide the government with a report outlining the causes and corrective measures it will be taking to manage prices.