The rupee declined by 27 paise to close at 82.76 against the US dollar on Thursday after the US Federal Reserve’s interest rate hike and its hawkish stance dented investor sentiments.
A massive sell-off in domestic equities and a strong greenback overseas also weighed on the local unit, forex traders said.
It finally settled at 82.76, down 27 paise over its previous close of 82.49.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, rose 0.56 per cent to 104.35.
Brent crude futures, the global oil benchmark, dropped 0.76 per cent to USD 76.54 per barrel.
In the domestic equity market, the 30-share BSE Sensex closed 878.88 points or 1.40 per cent lower at 61,799.03. The broader NSE Nifty fell 245.40 points or 1.32 per cent to 18,414.90.
The US Fed on Wednesday increased interest rates by 50 basis points on expected lines and signalled more hikes ahead to fight inflation. The US central bank raised the interest rate to 4.25-4.50 per cent to the highest level in 15 years.
Foreign institutional investors (FIIs) were net sellers in capital markets on Thursday as they sold shares worth Rs 710.74 crore, according to exchange data.
“Rupee opened higher after the Fed raised rates by 50 bps. Fed Chairman, in his commentary, said that the central bank has more work to do in raising interest rates and vanquishing inflation.
“The FOMC statement retained language saying ‘ongoing’ hikes will be appropriate to reach ‘sufficiently restrictive’ stance that returns inflation to 2 per cent over time,” said Gaurang Somaiya, Forex & Bullion Analyst, Motilal Oswal Financial Services.
The focus will now be on the ECB and BoE policy statements, which are likely to provide cues to the major crosses.
“We expect the USD/INR (Spot) to trade sideways and quote in the range of 82.20 and 83.05,” Somaiya added.