Rupee Hits Lowest In More Than 2 Years

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MUMBAI – The rupee ended weaker on Wednesday after dropping to its lowest level in over two years as investors reduced their exposure to risk ahead of the Federal Reserve’s policy meeting, where it is expected to unveil steps to revive a flagging US economy.

A wobbly euro and choppy domestic equities, which slipped 0.2 per cent in choppy trade, added to the rupee’s woes, traders said.

The Fed is expected to announce at 1815 GMT plans to rebalance its portfolio in favour of longer-dated bonds and so push long-term interest rates — already near historic lows — even lower in a move known as Operation Twist.

“Given the worsening growth scenario around the world and the possibility of a sharp movement in the dollar after Fed’s decision, it is very logical to see people square of risky positions,” said Naveen Raghuvanshi, an associate vice president at Development Credit Bank.

Raghuvanshi added the rupee could move in wide band of 47.00-48.50 on Thursday depending up the Fed’s action plan and how the markets respond overnight.

The partially convertible rupee ended at 48.325/335 per dollar, 0.58 per cent weaker than Tuesday’s close of 48.05/06 and after touching 48.34 intraday — its weakest since Sept.16, 2009.