Rupee Plunges Sharply Against US Dollar

The Rupee crashed terribly on Wednesday, ahead of the US Federal Reserve meeting.

According to officials, the Indian currency provisionally fell by 12 paise stabilizing at 79.90 against the US dollar. At the early trade, the Rupee opened at 79.83 and finally ended at 79.91, down 13 paise over its previous close of 79.78 against the greenback currency.

The US Fed is expected to raise interest rates by 75 basis points (bps), with a possible increase to 100 bps. By year’s end, traders anticipate the Fed will increase the rate to 3.4 percent in an effort to get inflation back on track.
The Indian rupee has depreciated by 5.6% vis-à-vis the US dollar since the Russia-Ukraine war broke out. The US dollar Index has appreciated by 9.9% during the same period, thus indicating that much of the weakness in rupee was in lieu of a strong dollar.

As per research, any Appreciation of the dollar leads to depreciation of the Rupee/Dollar Exchange rate.