Forex update
Posted by :- prashun talukdar
“As expected the Fed raised interest rates as expected by 75 bps to 3.25 per cent and the dot-plot (future projections of rate) shows another 100-125 bps by year end and rates peaking at 4.60 per cent in 2023. As the FOMC dust settles, its over to the BoE, the SNB, the BoJ and the RBI policies now! Though not a roller coaster one, but another round of bumpy ride can be expected ahead these central banks meetings,” said Amit Pabari, MD, CR Forex Advisors.
“Well, there is an increased pressure on RBI after another jumbo hike by the Fed and markets expect a 40 bps hike by the RBI on its meeting scheduled this month end. With the current liquidity crunch which has now fallen into a deficit of over Rs 21,000 crore from a Rs 8.03 lakh surplus, inflation uncomfortably high, its going to be a challenge for RBI to manage liquidity ahead of festive season while being on a hiking spree. This time, possibly RBI might not be able to use its FX reserves as much as it did earlier to protect rupee, as there a severe liquidity crunch in the market. Clearly there is a pressure on RBI and will be interesting to see how RBI will be able to defend rupee which is above 80.00 levels. If RBI lets rupee on its free course in line with the global peers, 80.50 to 81.00 shall be shortly seen,” he added.