Rupee crashes 54 paise to 2.5-month low on another Fed rate hike hint

Marking its weakest level in over two-and-a-half months, the rupee today plummeted by a whopping 54 paise to end at 64.81 a dollar after the Federal Reserve left the door open for a rate hike in December.

This was the lowest level the domestic currency had seen since since July 3 this year, when it had closed at 64.88 against the US dollar.

The US Federal Reserve's historic overnight decision rattled overall forex market sentiment, triggering panic dollar buying from corporates and importers.

The Fed turned more hawkish than expected and made formal announcement on Wednesday after its two-day meeting that it would begin normalising its crisis-era stimulus programme into reverse from next month and stick with plans for further rate rises.

The Fed was the first among the major global central banks to announce an extensive asset purchase programme in the wake of the financial crisis of 2007-08.

However, stock markets largely survived a big fall.

On Wednesday, the rupee had logged its first gain in three sessions by rising 6 paise.

Meanwhile, domestic bourses continued to reel under selling pressure for the third-straight day as investors fretted about global concerns and decided to take some profits after its recent record higher, though managed to recoup most of the early losses following Fed-induced selloff.

At the Interbank Foreign Exchange (Forex) market, the rupee opened with a gap-down at 64.50 against Wednesday's finish of 64.27 tracking overnight global developments.

The breakneck selloff escalated as trading progressed with the local unit hitting a fresh intra-day low of 64.84 in mid-afternoon deals.

Registering its second biggest fall of the year, it concluded the session at 64.81, revealing a steep loss of 54 paise, or 0.84 per cent.

The RBI, meanwhile, fixed the reference rate for the dollar at 64.5256 and for the euro at 76.7403.

The dollar remained broadly firm against all major trading rivals and rallied to a two-month high against the yen on Thursday after a hawkish-sounding US Federal Reserve heightened expectations of an interest rate increase in December.

The dollar index, which measures the greenback's value against a basket of six major currencies, was marginally weak at 92.17 after hitting one-week high.

In cross-currency trades, the rupee remained under pressure against the pound sterling to end at 87.31 from 86.99 per pound, but recovered against the Euro to conclude at 77.07 from 77.12 earlier.

It also regained against the Japanese yen to close at 57.60 per 100 yens from 57.73 yesterday.

In forward market today, the premium for dollar declined further owing to persistent receivings from exporters.

The benchmark six-month premium payable in February drifted to 113.50-115.50 paise from 117-129 paise and the far forward August 2018 contract also moved down further to 251.50-253.50 paise from 256-258 paise yesterday.

On the international energy front, crude prices dipped on Thursday, weighed down by rising US crude inventories and production as well as a stronger dollar, which potentially hampers fuel consumption in countries that use other currencies at home.

Though, the fall was capped after Iraq's oil minister said OPEC and other crude producers were considering extending or even deepening a supply cut to curb a global glut.

Brent crude futures, the international benchmark for oil prices, were at USD 56.13 a barrel in early Asian trade, down 16 cents, or 0.3 per cent, from their last close.