The dollar index was at 106.7 and has risen over 3% since November and yields of the 10 year US treasury bills are trading at 4.39%.The Indian rupee depreciated to a life-time low for the third consecutive day as traders turned risk averse ahead of the US Federal Reserve's rate cut decision expected later Wednesday. The rupee closed at 84.952/USD 1, five paisa weaker from its previous close of 84.895/USD 1.
Dollar sales from local equities put further pressure on the currency. The Reserve Bank of India (RBI) likely intervened in the market to prevent excess volatility, traders said.
Market participants have fully priced in a 25-basis point cut by the US Fed, expected on Wednesday after market hours. However, a cautious outlook from US Federal Reserve officials, may add further pressure on the currency, traders said.
"There are inflationary pressures in the US market, and hence Fed commentary is expected to be hawkish. US bond yields are also rising because of increasing US inflation, hence there are many positives for the dollar," said Anindya Banerjee, head, currency research at Kotak Securities.
Investors will now look for cues on changes to Fed policymakers' projection of rate cuts in 2025 from the September forecast. Back then, Fed officials said they expect interest rates to come to a range of 4.25% to 4.50% by year-end.
The dollar index was at 106.7 and has risen over 3% since November and yields of the 10 year US treasury bills are trading at 4.39%.
Foreign portfolio investors sold ₹1,316.8 crore from Indian equities on Wednesday, BSE data showed.
