The Indian rupee ended at record closing low against the U.S. dollar on Friday following hawkish comments from Federal Reserve Chair Jerome Powell and withdrawal of support from the Reserve Bank of India.
The local currency weakened five paise to close at 83.34 against the U.S dollar on Friday. It closed at Rs 83.29 on Thursday, according to Bloomberg data.
Intraday, it depreciated 21 paise to hit an all-time lowest level of Rs 83.50 against the U.S. dollar, which was the steepest single day fall since Sept. 5 when it fell 35 paise.
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"Slow and steady depreciation should keep happening as lot of cash dollar shortage is reported. If RBI does not supply then market hedges through forward premium which brings forward premiums down and spot up," said Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors LLP.
"A slow and steady depreciation towards 84 looks to be on cards unless RBI has other ideas", he added.
Here's What Analyst Have To Say
'Central Bank's Action Crucial To Watch Out'
Kunal Sodhani, vice president, Shinhan Bank (Global Trading Centre)
"Hawkish comments from Fed's Powell prolong the slide of Treasury bonds, pushed DXY higher and stocks got sold off. For USDINR, it is quite an important day considering yesterday's close, central bank's action crucial to watch out today," Sodhani said.
"A break of Rs 83.32 may open doors for Rs 83.60 levels while Rs 83.15 acts as a support," Sodhani said.
RBI Intervention Likely
Anindya Banerjee from Kotak Securities said the Reserve Bank of India may have intervened aggressively, and "that's why USDINR retraced most of the early morning gains".
"Over the next week, we could see USDINR oscillate between a range of 83.10 and 83.50 on spot as RBI remains vigilant to cap volatility but at the same time, hawkish Fed can keep the USD well supported," he said.
'Battle With Inflation'
Ritesh Bhansali, director at Mecklai Financial Services
"Fed policymakers including Powell on Thursday said that they are still not sure that interest rates are high enough to finish the battle with inflation. Markets digested the comments which sounded hawkish from FED policymakers aiding in the gains in the dollar. The data front saw US Unemployment Claims coming in marginally lower at 217,000 against the expected 218,000", Bhansali said.
83.29 was a crucial resistance, he said. With that broken, the rupee is expected to move towards the levels of 83.50. Exporters are advised to take hedges above 83.25 levels in tranches while, importers are advised to take hedges below 83.15 levels to cover their immediate payments, he added.
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