Indian Rupee (INR) crashed and dipped 31 paise against US Dollar, sinking to an all-time low of 80.15 against the greenback after US Federal Reserve Chairman Jerome Powell signaled more interest rate hikes ahead. On Monday morning, the rupee opened at 80.0750 against the US dollar and against its previous close of 79.8650.
INR’s previous nadir against the dollar was in September when the currency hit 80.06 against the USD. The greenback is up 7% year to date against the local currency.
The dollar index surged to above 109, the gauge’s highest level in a year while GBP-USD plunged below 1.17 followed by a fall in EUD-USD, which is expected to slip below 0.99. In Asia both onshore and offshore Chinese Yuan fell to a two-year low, hitting $6.9 amid pressure on other currencies including the INR in the region.
Powell’s 8-minute keynote address at the Kansas City Fed’s annual policy forum in Jackson Hole, Wyoming on Friday spooked investors, sending everything from stocks to currency downhill. Powell warned of “more pain” to American consumers as he declared more interest rate hikes were needed to tackle four-decade high inflation in the world’s biggest economy. Key US stock indices such as the Nasdaq closed 3.9% lower and the Dow retreated 3% on the day. The carnage spread to the other side of the Pacific when markets opened for trade in Asia; stocks nosedived 2-3% from Tokyo to Mumbai.
After a gap down opening on Monday, both Sensex and Nifty continue to trade almost 1.4% lower.