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Fed rate hike could lift dollar index to 112.60-113.30 levels: Emkay Wealth

Mumbai, Sep 15 (IANS) The , which measures the strength of the greenback against the basket of six major currencies, is likely to remain in the 112.60-113.30 range, if the US Federal Reserve continues to tighten future, according to a report by Emkay Wealth Management.

“Given the Fed’s resolve to raise rates to contain inflation, the likelihood of the index rising to 112.60-113.30 cannot be ruled out,” the report said.

The US is tightening rates aggressively to control inflation. The current position of the US Fed and aggressive action are quickly priced in by the markets. If the rate action so far and Fed signals in the recent past are up to snuff, it’s safe to conclude that Fed monetary policy will prevail at least through year-end. .

The yield of the US dollar currency will rise faster against other currencies, and this will strengthen the currency. The other factor that helped the dollar could be other countries’ slower responses to the inflationary spiral through rate action, which also created a lag in terms of currency responses.

The Dollar Index is rising and recent ranges have been 104.50 to 109.50 which has led the Rupee to depreciate over the past few weeks. On the downside, strong support levels are found at 106.40 and 104.50.