Rupee Crashes To A New Record: On Wednesday, the rupee was able to reach a new record low of 82.84 in relation to the dollar. This was a reversal of earlier gains.
On Wednesday, the rupee hit a new record low of 82.95 against the dollar, reversing gains from earlier in the session. This occurred on the back of more indications that high inflation will keep major central banks in rate-hike mode, which hurt the recent rally in risk assets.
After beginning the day at 82.3062, the rupee ended the day at an all-time low of 82.8938 to one dollar. This is a significant drop from the previous day’s closing rate of 82.36. Bloomberg showed that the rupee’s value fell to its lowest level ever. During a session of volatile trading on Wednesday, the value of the local currency against the US dollar reached a new intraday record low of 82.9450, which was the lowest level ever seen during a single trading day.
Anil Kumar Bansal’s statement on the situation
According to Anil Kumar Bhansali, Head of Treasury at Finrex Treasury Advisors, was quoted as saying that, “once the 83.00 level is broken the next target should be 83.50 because it appears that there is no level that the rupee can’t break through”, and “therefore 83.50 should be the next target.”
Traders from two private banks told Reuters that two public sector enterprises had made a significant demand for dollars, which contributed to the decline of the rupee to a record low. This demand for dollars was a factor in the decline of the rupee.
On Tuesday, the rupee had attempted to strengthen to the 82-mark at one point before ending the day at 82.36, with a fag-end sell-off pushing the domestic currency to close nearly flat.
A trader at a bank based in Mumbai told Reuters that the session that took place the day before (Tuesday) was additional evidence suggesting that the bias on the rupee is to the downside.
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The market participant stated that there would “need to be reasonable certainty” that yields in the United States had reached their maximum level in order for there to be a “sustained and respectable recovery” in the value of the rupee.
The demand for dollars from importers such as oil corporations is what caused the rupee to fall back from the 82 level on Tuesday, according to some bankers that Reuters spoke with.
Two others, on the other hand, asserted that it was probably due to the fact that the RBI purchased USD/INR contracts in advance of their expiration on Friday.
Pressure on the Bank of England
After risk assets reversed recent gains and fell as data revealed that skyrocketing food costs had sent British inflation back to a 40-year high of 10.1 percent, the domestic currency hit a new all-time low of 82.9450. This put pressure on the Bank of England to hike rates aggressively, which resulted in the domestic currency reaching a new low for all time.
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The sentiment of investors was conflicted on Wednesday as a result of positive corporate earnings results and fears of persistently high inflation leading to more aggressive policy tightening. This led to a slight decline in global stock prices, which had been rising in recent trading sessions.
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