Rupee Rises on Fed Rate Hike Bets

The Indian rupee Trades Higher Against US dollar on Tuesday, as investors anticipated another rate hike by the US Federal Reserve. The rupee rose to 78.95 per dollar, up from its previous close of 79.23.

The Federal Reserve is expected to raise interest rates by 0.75 percentage points at its meeting later this week. This would be the largest rate hike since 1994. A higher interest rate in the US would make the dollar more attractive to investors, which could put downward pressure on the rupee.

However, some analysts believe that the rupee Trades Higher Against US could continue to trade higher in the near term, as investors remain bullish on the Indian economy. India is expected to grow its economy at a rate of 7.5% in the current fiscal year, which is one of the fastest rates in the world.

Strong foreign inflows into Indian markets are also supporting the rupee. In the first quarter of 2023, foreign investors invested a net of $29.4 billion in Indian equities and debt.

Overall, the outlook for the rupee is positive in the near term. However, the currency could come under pressure if the Fed hikes interest rates more aggressively than expected.

Here are some additional factors that could affect the rupee Trades Higher Against US in the coming days:

• The outcome of the Fed meeting later this week.
• The release of US economic data.
• The movement of global oil prices.
• The political situation in India.

Bottom line: Analysts expect the rupee to trade in a range of 78.50 to 79.50 per dollar in the coming days. The currency could appreciate if the Fed hikes interest rates less aggressively than expected, or if there is a positive surprise in the Indian economic data. However, the rupee could also come under pressure if the Fed hikes interest rates more aggressively than expected, or if there is a political crisis in India.