The Indian Rupee slumped yesterday after a recent spell of weakness. A massive surge in US dollar overseas hurt the local currency. The INR closed at 74.02 per US dollar, down around 70 paise on the day. The local currency has tanked near six-week low following the deep correction today. A slippery undertone in local equities and widening trade deficit are keeping INR under check. Taking merchandise and services together, overall trade deficit for April-May 2021 is estimated at USD5.85 Billion as compared to the surplus of USD4.06 Billion in April-May 2020.
Meanwhile, the US dollar index continued to see a sharp upmove after breaking above 90 mark. The index hit a two-month high near 92 mark. The US Fed officials see growth coming in stronger in 2021, and expect inflation to average 3.4% in the final three months of the year. The Fed hiked its interest-rate outlook in 2023 to 0.6% from previous projections of 0.1% in March, signaling two 0.25% rate hikes in 2023. This should weigh on the emerging market currencies in the near term. Meanwhile, the key equity indices ended with moderate cuts after a volatile session on Thursday. The Nifty closed above the 15,650 level. IT shares bucked the trend as they advanced for fourth consecutive session.
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