The Indian rupee experienced a slight dip against the US dollar as global equity and currency markets showed signs of weakness. At 9:10 am, the domestic currency was at 83.31 against the dollar, reflecting a marginal 0.03 percent decrease from its previous close at 83.29.
In the backdrop of this, India’s benchmark Sensex witnessed a decline of approximately 900 points or 1.2 percent over the last two trading sessions. The broader trend in Asian currencies also leaned towards depreciation, influenced by the minutes of the US Federal Reserve meeting, which suggested a prolonged period of elevated interest rates. Investors are closely monitoring the upcoming US jobs data, scheduled for release on Friday, especially after indications from the Fed’s December meeting minutes hinted at the likelihood of interest rates remaining at restrictive levels for an extended duration.
One of the key factors contributing to the subdued performance of emerging market currencies is the prevailing risk aversion among investors, prompting a preference for the US dollar. This shift in sentiment may result in corrections in equities as expectations for rate cuts diminish, according to analysts.
Several Asian currencies mirrored the rupee’s decline: the South Korean won fell by 0.4 percent, the Indonesian rupiah declined by 0.26 percent, the Taiwan dollar lost 0.2 percent, the Malaysian ringgit decreased by 0.16 percent, while the Philippines peso and China renminbi both experienced a 0.08 percent drop.
The dollar index, a measure of the US currency’s strength against major counterparts, was recorded at 102.478, marking a marginal 0.02 percent decrease from its previous close at 102.494.
The interconnectedness of global financial markets underscores the impact of macroeconomic factors on currency movements. The delicate balance between risk appetite, interest rate expectations, and economic data releases continues to shape the dynamics of the foreign exchange market, with market participants keeping a keen eye on evolving trends and developments.
Check here for the latest updates in Hindi!