The Indian rupee hits a fresh record low against the U.S. dollar on Wednesday amidst growing concerns over global growth expectations and investors awaiting U.S. Federal Reserve Chair Jerome Powell’s twoday testimony before Congress. The weak global cues also hit benchmark equity indices as they closed over one percent lower on Wednesday.
The rupee closed at an all time low of 78.38 against the dollar compared to 78.07 on Tuesday even as investors are hoping to get more cues on further rate hikes and inflation trajectory from Powell’s declaration. Amidst the ongoing Russian invasion of Ukraine, the U.S. Federal Reserve had hiked rates by an unusual 75 basis points. There are indications of a further increase in rates.
The rupee touched a fresh alltime low as risk-averse sentiments, foreign fund outflows, and weaker Asian currencies, following depreciation in the Japanese Yen weighed. “The impact of a weaker Yen will add to the pressure on Asian currencies and indirectly weigh on the rupee too. World over, major central banks are turning hawkish to control inflation which could result in slower growth or even recession in developed nations,” said Dilip Parmar, Research Analyst, HDFC Securities.
Crude oil prices have corrected from the recent highs and are providing a lot of buffer to the domestic currency. Brent crude futures, the global oil benchmark, have declined more than 13 percent to $107.82 per barrel from the recent highs of $125.19 a barrel.