Rupee Falls 10 Paise To 82.90 Against A Strong Dollar As Fed Signals More Hikes

The rupee weakened against a strong dollar, which rose to the highest in a week as the US Federal Reserve signalled interest rates would likely peak above what markets expect currently.

PTI reported that the domestic currency fell 10 paise to close provisionally at 82.90 against the US dollar.

Bloomberg quoted the rupee last changing hands at 82.9150 per dollar after opening at 82.8175, compared to Wednesday's close of 82.7850.

The rupee's trading range of 82.7363-82.9263 to the dollar showed a more pessimistic sentiment for the domestic currency. 

Reuters reported that the rupee ended at 82.88 per US dollar, down from 82.78 in the previous session. It was a muted but choppy session, with rupee turning briefly higher by mid-morning before slipping back below 82.90. 

As anticipated, the Fed hiked its interest rate by 75 basis points (bps) to 3.75 - 4.00 per cent range on Wednesday.

The dollar initially declined, but recovered sharply after Fed Chair Jerome Powell stated that the fight against inflation will necessitate higher borrowing costs.

"Incoming data since our last meeting suggests that the ultimate level of interest rates will be higher than previously expected," Mr Powell told reporters, adding: "It is very premature to be thinking about pausing... we have a ways to go."

Any hopes that the central bank would soon switch to a less aggressive policy approach were shattered by Mr Powell's hawkish remarks.