Rupee depreciates further

19 Aug 2022 , 10:00 AM

On Friday, the Indian rupee depreciated against the US dollar as Asian currencies declined due to worries that the Federal Reserve could continue to raise rates swiftly.

By 03:32 GMT, the exchange rate for the rupee was 79.7675 to the US dollar, down from 79.6725 the previous session. Against the dollar, the offshore Chinese yuan drops to its lowest level in three months. The dollar index reached 107.72 on Friday, its highest level since July 18.

An unexpected decline in U.S. initial claims for unemployment indicates a strong labor market, giving the Fed flexibility to continue raising rates quickly. James Bullard, president of the St. Louis Fed, stated that he is inclined to favor a third consecutive 75-basis-point increase in interest rates in September.

Unless RBI intervenes once more and sells dollars, the route for the rupee to go below 80 “seems quite possible,” according to a dealer at a private sector bank.