Any Intervention By RBI May Arrest Re Fall

New Delhi: The dollar index rising above 108 and the 10-year bond yield spiking to 4.52 per cent are negatives from the perspective of FII fund flows. But this is likely to be only temporary, said experts.

Forex analysts expect the rupee to trade with a negative bias on global equities following a Hawkish Fed and a strong dollar. Concerns over slowdown in the economy may further weigh on the rupee. “Any intervention by the Reserve Bank of India (RBI) may also support the rupee. Traders may take cues from final GDP, weekly unemployment claims, and existing home sales data from the US. USD-INR spot price is expected to trade in a range of 84.9 to 85.25,” said Anuj Choudhary – Research Analyst at Mirae Asset Sharekhan.

After the US Fed’s decision, the Dow Jones declined 2.58 per cent and closed at 42,326.87. The S&P 500 dropped 2.95 per cent to 5,872.20 and the Nasdaq declined 3.56 per cent to close at 19,392.69. The Indian rupee closed at a record low of 84.94 against the US currency on the previous trading day.

Foreign institutional investors (FIIs) sold equities worth Rs1,316.81 crore in India on Decem-ber18, while domestic institutional investors bought equities worth Rs4,084.08 crore on the same day.

The Indian stock market opened with a decline on Thursday. At around 01:14 pm, the Sensex was trading at 79,300.6 after dropping 881.51 points or 1.10 per cent, while the Nifty was trad-ing at 23,966.15 after dropping 232.70 points or 0.96 per cent.

The Indian rupee fell 18 paise to all-time low of 85.12 against the US dollar on the National Stock Exchange (NSE) over Federal Reserve’s hawkish commentary on rate cut outlook.

The U.S. Fed meeting which was held on Wednesday, shifted its focus towards maximum em-ployment and price stability, the FOMC halved the number of rate cuts expected for 2025.

After the US Fed’s decision, there was a strong rally in the dollar and the dollar index crossed the 108 level.