Rupee Weakens Sharply Against Dollar On Strong US Data

The Indian rupee closed sharply lower against the greenback as the dollar index rose after data showed U.S. consumer confidence increased for the first time in four months.

The local currency depreciated 17 paise to close at Rs 83.35 against the US dollar. The rupee closed at Rs 83.18 on Tuesday, according to Bloomberg data.

The U.S. consumer confidence index increased to 102.0 in May, from an upwardly revised 97.5 in the preceding month, Conference Board said as reported by Bloomberg. The shot up in the index affirmed positive outlook about business condition and the US labour market.

The dollar index which gauges the strength of the U.S. currency against major peers across the globe, rose 0.2% to 104.80 during the day. It was at 104.70 as of 3:47 p.m.

"The rupee opened marginally weaker at 83.22 against the previous close of 83.18. The dollar index hovered at 104.72, after hawkish comments from Minneapolis Federal Reserve President Neel Kashkari, who stated that the Fed should hold off cutting rates until substantial progress on inflation is achieved and supported raising rates if inflation does not decrease," said Ritesh Bhanshali, director, Mecklai Financial Service Ltd.

Meanwhile, consumer confidence unexpectedly increased to 102 in May. The release of the Personal Consumption Expenditure price index on Friday is expected to provide further guidance on the Fed’s interest rate trajectory, Bhanshali added.