Rupee crashes to fresh 3-month low on Fed rate hike fears

New Delhi, March 3: The rupee witnessed a free fall - breaching the key psychological 65-mark to end at a fresh three-month low of
65.17 against the resurgent dollar on growing fears that the Federal Reserve would be more aggressive with interest rate hikes amid heightened volatility in the stock markets. 

Stamping its second straight weekly slide, the home currency lost a staggering 44 paise. 

This is the lowest closing for the home currency since November 16, last year.

The Indian unit plunged to a low of 65.32 in intra-day levels before regaining some lost ground. 

Overall, the forex market sentiment turned highly fragile and injected an air of fear after the new Fed Chairman Jerome Powell's first congressional testimony gave a markedly bullish assessment of the US economic outlook, triggering speculation over a quicker pace of interest rate increases as
the economy accelerates. 

Heavy month-end dollar demand from oil companies along with aggressive hedging strategy adopted by importers in the wake of currency volatility and heightened worries over mass funds exouds predominantly weighed heavily on the rupee trade.

Besides, renewed concerns that a rebound in global crude oil prices will have an adverse impact on fiscal deficit too kept market participants cautious.