The rupee shoots up 42 paise to 76.20 against the US dollar on the stocks rally

The US Federal Reserve is likely to hike rates by 25 basis points.

The US Federal Reserve is likely to hike rates by 25 basis points.

The rupee shot up 42 paises against the US dollar to a near two-week high of 76.20 on Wednesday, following positive domestic stocks and Asian currencies ahead of the US federal government’s rate hike decision.

On the interbank FX market, the local unit opened at 76.40 against the greenback, seeing daily highs of 76.19 and lows of 76.44.

The rupee traded at 76.20, up 42 paise from its previous close of 76.62.

“The rupee appreciated against the US dollar, benefiting from stronger Asian currencies and risk-on sentiment. FX markets are somewhat dovish ahead of Wednesday’s Fed decision, while US 10-year bond yields fell after hitting 2.20%, the highest since 2019,” said Dilip Parmar, research analyst, HDFC Securities .

The US Federal Reserve is likely to raise interest rates by 25 basis points and plan more hikes this year given higher inflation.

Spot USDINR could find support in the 76-75.70 range while resistance stands around 76.70, Mr Parmar added.

Meanwhile, the dollar index, which measures the dollar’s strength against a basket of six currencies, fell 0.38% to 98.72.

Brent crude futures, the global oil benchmark, rose 1.14% to $101.05 a barrel.

On the domestic stock market front, the BSE Sensex closed 1,039.80 points, or 1.86%, higher at 56,816.65, while the broader NSE Nifty was up 312.35 points, or 1.87%, to 16,975.35.

Foreign institutional investors were net sellers in the capital market on Tuesday, selling ₹1,249.74 crore of shares, according to stock market data.

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