The US Federal Reserve raised its target interest rate by three-quarters of a percentage point to a range of 3.00%-3.25% on Wednesday and signaled more large increases to come in new projections showing its policy rate rising to 4.40% by the end of this year before topping out at 4.60% in 2023 to battle continued strong inflation.
Indian shares fall as Fed signals more rate hikes
Indian shares fell on Thursday, in line with Asian peers, while the rupee hit a record low after the US Federal Reserve raised interest rates and indicated more hikes than markets had expected.
The NSE Nifty 50 index fell 0.53% at 17,624, while the S&P BSE Sensex slipped 0.51% to 59,150.
The Indian rupee hit a record low of 80.45 against the U.S. dollar.
22 Sep 2022, 09:03:02 AM IST
Won tumbles as harbinger for EM currencies crushed by Fed
South Korea’s won weakened through the psychological level of 1,400 per dollar for the first time since 2009 after the Federal Reserve’s rate hike on Wednesday, heralding further losses for emerging-market currencies.
The won slid as much as 1% to 1,409.56 per dollar on Thursday, with Asian currencies similarly weaker against the greenback. The won is hardly an outlier in the larger emerging-market complex — the MSCI emerging-market currency index is down by about 7.5% so far this year and heading for its deepest loss since 2008.
That theme, of a continuing mismatch between U.S. demand for goods and services and the ability of the country to produce or import them, ran through a briefing in which Powell stuck with the hawkish tone set during his remarks last month at the Jackson Hole central banking conference in Wyoming.
Recent inflation data has shown little to no improvement despite the Fed’s aggressive tightening – it also announced 75-basis-point rate hikes in June and July – and the labor market remains robust with wages increasing as well.