Rupee Weakens Sharply Against US Dollar

The Indian rupee closed weaker against the US dollar on Wednesday ahead of Federal Reserve Chair Jerome Powell's speech.

The rupee depreciated 14 paise to close at 83.93 against the greenback, according to Bloomberg data. It had closed at 83.79 on Tuesday.

International benchmark Brent crude was 0.43% lower at $77.53 at 3:43 p.m. The dollar index was 0.10% up at 101.55 at 3:42 p.m.

The dollar index recorded a seven-month low, in correspondence with a falling trend in US Treasury yields and intense dovish bets on the Fed, according to Kunal Sodhani, vice president of Shinhan Bank. "There remains a divergence in aggressive market anticipation for rate cuts and US data points, thus this aggressiveness may cool off."

For the rupee, 83.60 acts as a base, while 83.90 is a resistance, he said.

The preliminary US S&P Global PMI for August is due on Wednesday. If the report shows a better-than-expected outcome, it could cap the downside for the US dollar, Sodhani said.

The market participants will keenly scrutinise the FOMC meeting minutes, due later in the day, for cues about Fed policy stance.