Rupee weakens to above 79 per dollar after RBI hike

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Rupee rises sharply to below 78 per dollar

The rupee reversed early gains and weakened above 79 per dollar after the Reserve Bank of India painted a grim picture of inflation, responding with a 50 basis point hike to its highest interest rate since 2019 and for the third time in a row.

Bloomberg was last in trading at 79.10 against the greenback after opening with a sharp gain of 50 paise from its previous closing of 79.4713.

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That even as the dollar struggled to gain a foothold on Friday after declining at its strongest pace in two weeks, as investors remained in suspense ahead of highly anticipated US job numbers and amid growing concerns about a recession.

The US dollar index, which measures the greenback against a basket of currencies, fell 0.68 percent overnight, the largest drop since July 19, and last traded at 105.79.

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Investors await the key US nonfarm salary report due at 1230 GMT, which will provide hints on how the US economy is doing. Economists expect an increase of 250,000 jobs for July, after 372,000 were added in June.

“Payrolls seem to be clearly on everyone’s mind for tonight, so I think that keeps things relatively subdued,” Ray Attrill, head of FX strategy at National Australia Bank, told Reuters.

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