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Dollar nears two-month high on Fed hike expectations and oil gains
The dollar index rose 0.5% to 101.1, and the rupee fell 11 paise to 95.73 per US dollar as higher FX and oil prices added pressure to India’s import bill.
The US dollar climbed to its highest level in nearly two months as expectations of another near term Federal Reserve rate hike strengthened and rising oil prices offered additional support, LiveMint Markets said.
The dollar index, which tracks the US currency against a basket of major currencies, advanced 0.51% to 101.06 after touching 101.23, its highest since July 29.
In India, the rupee weakened by 11 paise to close at 95.73 per US dollar, after falling to an intraday low of 95.76, with the move tied to the stronger American currency and a modest rebound in crude.
According to Seema Srivastava of SMC Global Securities, a rising dollar can act as a headwind for Indian equities as foreign investors often reduce emerging market exposure when US yields rise, and a weaker rupee can increase the national oil import bill given that India imports more than 80% of its crude needs. She added the Reserve Bank of India may have to delay interest rate cuts to defend the currency, keeping borrowing costs elevated and weighing on equity valuations.
Latest closeWTI crude $91.79 ▼3.0%|Dollar index 101.16 ▲0.7%