The dollar held stable Tuesday against key rivals, staying close to a two-decade high, while the rupee made some progress.
Even as markets prepared for a wave of interest rate hikes from major central banks gathered this week, with the first volley coming from Sweden, the rupee gained some ground against the dollar, which held firm near a two-decade high versus key rivals on Tuesday.
According to Bloomberg, the rupee last traded at 79.7563, down from Monday’s closing of 79.7725, while the dollar index, which measures how the dollar performs against a basket of six other major currencies, increased 0.128 percent to 109.680.
According to PTI, the rupee went up 6 paisas against the US dollar to close tentatively at 79.75.
The expectation that the Federal Reserve would raise interest rates and cause a recession kept investors nervous about the world’s markets. It is expected that the US central bank’s biggest tightening cycle in a generation will push two-year Treasury rates above 4% for the first time since 2007.
According to Andrew Ticehurst, a rates strategist at Nomura in Sydney, “We are seeing clear signs that central banks are not about to ‘blink’ and are prepared to tolerate recession if that is the price they need to pay to bring inflation under control, and this means higher short-end yields, globally.”
Only Nomura and UCLA Anderson School of Management have predicted an increase of 100 basis points. According to Mr. Ticehurst, such a change “would probably be more than enough to send the US two-year above 4% in the immediate term.”
These hopes have kept dollar bulls motivated and increased the value of the dollar.