Dollar closed at 64.8050 against its opening at 64.5000. Dollar ended up on on overseas fund outflows from local debt after the Finance Ministry official said that Arun Jaitley may relax fiscal deficit target for this fiscal year given the note-ban and roll out of goods and services tax. Initial public offering-related inflows amid selling by exporters. IPO related dollar flow will be seen today, giving support to the rupee. Also, the current levels are good for exporters to partially offload their dollar holdings. Federal Open Market Committee hinted of rate hike and tapering of balance sheet from October. Fed's positive stance about tapering of Balance Sheet in October and rate hike by end of this year will support dollar strongly. Federal Reserve left interest rates unchanged following a two-day policy meeting, but signalled that a further rise in short-term borrowing costs was still possible this year. The Fed also said it would begin unwinding in October its $4.2 trillion bond portfolio built up in the wake of the financial crisis, a decision that had been widely expected by investors. US Fed Chair Janet Yellen said in a press conference after the end of the meeting that the fall in inflation this year remained a mystery, adding that the central bank was ready to change the interest rate outlook if needed. Asian shares pared gains tracking upbeat dollar and uptick US Treasury yields after the Federal Reserve announced to begin balance sheet normalisation in October while keeping the room for one rate hike in December.
Sensex provisionally ends down 30 points with 20 components in the red.
INTERNATIONAL
Bank of Japan held policy steady as expected after the conlusion of it two-day meeting on Thursday, with an asset buying program focused on the yield curve at ¥80 trillion annually.
Gold dropped to its lowest level in over three weeks on Thursday as a stronger dollar and increasing prospects of a December rate hike by the Federal Reserve curbed appetite for the metal.
Korean peninsula is getting more serious by the day and cannot be allowed to spin out of control, Chinese Foreign Minister Wang Yi told his German counterpart.
Oil markets dipped on Thursday, weighed down by rising U.S. crude inventories and production as well as a stronger dollar, which potentially hampers fuel consumption in countries that use other currencies at home.
China's commerce ministry, taking aim at the United States, said on Thursday that some countries' unilateralism is an unprecedented challenge to global trade.