weakened past 82 per dollar for the first time in three weeks on Tuesday and briefly once again on Wednesday. The Indian government on Wednesday unveiled one of its biggest jumps in capital spending in the past decade, to about $122.3 billion, and said the fiscal deficit would fall next year. Gross market borrowing is estimated at 15.43 trillion rupees, while net borrowing is seen at 11.8 trillion rupees. "The budget was largely positive for all asset classes, but the rupee was tracking equities closely. Whatever strength the rupee had, reversed once Adani companies started declining," said Gaurang Somaiya, FX and bullion analyst at Motilal Oswal Financial Services. "The Federal Reserve meeting later in the day would be awaited, but I would say today's rupee move was tracking stocks." The Nifty 50 index fell as much as 1.5%, having jumped around 1.7% earlier, as Adani Group entities resumed their decline. Stocks have already seen outflows worth about $3.53 billion in January, which accelerated since last Wednesday when the Hindenburg report on Adani was published. Traders said there were chances of more outflows as stocks continue to bleed.
Foreign banks were seen bidding for USD/INR for the past two days, two dealers said.
Focus now shifts to the Fed's policy decision later in the day, with investors paying close attention to Chair Jerome Powell's speech for guidance on the rate-hike path.
Markets have fully priced in a 25 basis point hike at this meeting and reckon the U.S. central bank should be close to its peak. Data overnight supports this view, but the Fed is unlikely to send strong signals about it as "it only risks generating a premature fall in interest rates", wrote ING analysts in a note. Key economic prints such as U.S. ISM manufacturing and labour data were also due ahead of the event. (Reporting by Anushka Trivedi; editing by Eileen Soreng)
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