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Early Trading: Rupee Falls to Record Low of 81.09

NewsDesk, Sept 23 – While US Treasury yields rose to multiyear highs, importers’ need for dollars caused the Indian rupee to hit 81 against the US dollar in early trade, setting yet another record low.

Due to a fairly hawkish US Federal Reserve rate forecast, the local currency experienced its worst single-session percentage loss since February on Thursday, according to traders.

The local unit had accelerated its drop in the final hour of trading on Thursday, closing at the day’s low. A currency spot dealer at a Mumbai-based bank predicted that the pair (USD/INR) will reach 81 in the early sessions simply based on yesterday’s trend.

Following a run of superior performance, the rupee on Thursday was among its Asian counterparts’ largest losers. Overnight, the 10-year U.S. Treasury yield increased to above 3.70 percent, and the two-year yield peaked at 4.16%.

The so-called dot-plot predictions from Fed members that rates may reach 4.4% by the end of this year catalyzed the most recent sell-off in the bond market. This suggests additional rate increases of roughly 125 basis points over the final two sessions of 2022.

U.S. stocks fell overnight, with the S&P 500 Index reaching its lowest point in more than two months. The U.S. benchmark index has decreased by nearly 21% so far this year. Indian stocks, on the other hand, saw a little increase for the year.

The decline in rupee premiums to their lowest level in more than ten years is anticipated to help importers only somewhat, according to merchants.

On Thursday, the implied yield on the 1-year forward premium for the rupee fell to just 2.75 percent.

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