Tuesday, August 9, 2022
HomeShare MarketShare market Rupee up 14p at 79.76/$, best gain in 2 months

Share market Rupee up 14p at 79.76/$, best gain in 2 months

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MUMBAI: Share market – The rupee recorded a sharp recovery vis-a-vis the US dollar in the interbank foreign exchange after US Fed chief Jerome Powell assuaged markets with his less-hawkish statement.

Also read : US teetering on brink of recession as GDP contracts in second quarter

The rupee recorded its biggest gain in two months. It ended the day at 79.76 compared to its previous close of 79.90 – a rise of 14 paise, which is the sharpest since May 20. Late evening, the rupee gained further, trading below 79.70 levels.

Sentiment in the currency market was buoyed by the recovery in the stock exchanges, with the sensex gaining over 1,000 points. The Fed’s statement brought cheer to equity, forex and bond markets although Powell did not give any indication of future action. A major positive for markets was Powell’s statement that rates have reached neutral level.

“The worst appears to be over and there is a possibility of the rupee breaching 79.50. The Fed statement is not positive for the dollar. The decline in the rupee has halted, and any government decision to support the trade account could reverse the trend,” said K N Dey of United Financial Consultants.

According to Axis Bank chief economist Saugata Bhattacharya, the hot money component in foreign portfolio investment has already exited. He also does not see the need for the RBI to match step with the US Federal Reserve on rate hikes and expects the central bank to increase interest rates by 35-50 basis points (100bps = 1 percentage point) in the forthcoming policy on August 5.

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