The Indian rupee declined today on concerns that the planned interest rate hike from the Federal Reserve will deter investors from emerging markets. Yet the currency was able to recover as of now, suggesting that volatility on the market is rising after the Fed meeting and ahead of the holiday period.
The outlook for monetary tightening from the Fed made the US dollar stronger. This, in turn, will likely reduce capital inflows from overseas into Indian assets. All in all, the present sentiment on the Forex market is not favorable for riskier currencies of emerging economies.
USD/INR fell from 63.2800 to 63.2365 as of 9:58 GMT today after rising as high as 63.3550 and dropping as low as 63.1300.
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