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Indian Rupee Concludes Weaker Against Dollar on Increased Demand and Global Market Volatility

Strategic Insights

— 1 min read

The Indian rupee declined to a provisional closing of 79.96, its lowest level in over a decade, as importers and banks increased their demand for the US dollar ahead of the US Federal Reserve's meeting outcome. The currency touched a high of 80.01 and a low of 79.79, before ending weaker by 22 paisa from its previous close of 79.74 on Tuesday. The decline was also influenced by the Asian Development Bank's (ADB) reduced economic growth projection for India in 2022-23 to 7% from 7.2% earlier, citing higher inflation and monetary tightening.

Key Takeaways:

  • The Indian rupee ended the day at 79.96 (provisional), a decline of 22 paisa from its previous close of 79.74 on Tuesday.
  • The rupee declined due to increased demand for the US dollar from importers and banks ahead of the US Federal Reserve's meeting outcome.
  • The US dollar jumped to a new two-decade high on Wednesday, with comments from Russia's President Vladimir Putin rattling markets ahead of another likely aggressive rate hike from the US Federal Reserve.
  • The Asian Development Bank (ADB) reduced India's economic growth projection for 2022-23 to 7% from 7.2% earlier, citing higher inflation and monetary tightening.
  • The Reserve Bank of India will conduct an overnight variable rate repo auction for 500 billion Indian rupees ($6.25 billion) on Thursday.
  • The Indian banking system liquidity slipped into deficit for the first time in over three years, standing at 218.73 billion rupees as of Tuesday.

Statistics:

  • The Indian rupee declined by 22 paisa from its previous close of 79.74 to 79.96 (provisional).
  • The rupee touched a high of 80.01 and a low of 79.79 on Wednesday.
  • The US dollar reached a new two-decade high on Wednesday.
  • The Asian Development Bank reduced India's economic growth projection for 2022-23 to 7% from 7.2% earlier.
  • The Reserve Bank of India will conduct an overnight variable rate repo auction for 500 billion Indian rupees ($6.25 billion).
  • The Indian banking system liquidity deficit stood at 218.73 billion rupees as of Tuesday.

Sources:

  • The Business Standard
  • The Economic Times
  • The Asian Development Bank (ADB)

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