Rupee Tanks 40 Paise To 67.83 On Fed Rate Hike

Mumbai: The rupee took a sharp plunge of 40 paise against the US dollar to end at 67.83 as the US currency gained strength after Fed rate hike announcement.

Nervousness prevailed in the forex market following US Federal Reserve's overnight decision to raise interest rates for only the second time since the financial crisis even as hawkish outlook signalled more rate-hikes in 2017.

After months of lingering confusion, the US central bank hiked rates by 25 bps to 50-75 bps.

World financials and currency markets too reacted vehemently to the landmark outcome, ending months of lingering confusion and uncertainty.

The dollar strengthened across the board after the Fed upgraded its rate hike outlook amid expectations of economic projection surprises which may fuel further steep tightening path.

Forex dealers said increased demand for the greenback from importers against the backdrop of sustained capital outflows predominantly kept rupee under immense pressure.

The domestic unit resumed sharply lower at 67.76 from Wednesday's closing value of 67.43 at the Interbank Foreign Exchange (forex) market against the backdrop of overnight developments.

It accelerated downward pressure after a brief period of consolidation, sinking to hit a low of 67.87 before ending at 67.83, showing a steep loss of 40 paise, or 0.59 per cent.

This is the rupee's biggest single day fall since November 15.

The US dollar index was quoted sharply higher at 103 in late afternoon trade.

Meanwhile, the RBI today fixed the reference rate for the dollar at 67.7994 and euro at 71.1555.

In cross-currency trades, the rupee shot up against the pound sterling to finish at 84.68 from 85.27 from 85.78 and also rebounded sharply against the euro to settle at 70.66 from 71.70 yesterday.

The local unit too rebounded against the Japanese yen to settle at 57.20 as compared to 58.66 per 100 yens earlier.

FIIs continued their selling spree for the third straight day and sold shares worth Rs 632.29 crore.

However, domestic equities showed more resilient to a Fed rate hike with the benchmark Sensex falling by just 83.77 points to end at 26,519.07, while broader Nifty fell 28.85 points at 8,153.60.

In the forward market, premium for dollar displayed a steady to easy trend in the absence of any market moving factors.

The benchmark six-month premium for May was quoted at 131-133 paise from 131-132 paise, while far-forward November 2017 contract moved down to 273-275 paise from 275-277 paise yesterday.

On the global commodity front, crude prices rebounded on Thursday following sharp decline in the previous session on the back of a stronger dollar.

(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)