Indian Rupee: Dollar Strength Likely To Weigh

Indian Rupee: Dollar Strength Likely To Weigh

Sep 20, 2021 08:09 IST capital market

Dollar strengthening to one month high on tapering sentiments ahead of the crucial Federal Reserves September meeting is bound to pull the Indian rupee lower on Monday, 20 September 2021. Besides, weakness in domestic and regional equities amid cautious global cues is also likely to weigh down the local unit.

On Friday, rupee closed 4 paise higher at 73.48 against the US dollar on Friday, tracking a broad weakness in the American currency overseas. At the interbank forex market, the local unit opened flat at 73.49 against the greenback. During the session, the domestic unit witnessed an intra-day high of 73.42 and a low of 73.55. On a weekly basis, the rupee gained 2 paise against the American currency.

Domestic equity indices snapped three-day winning streak and ended with small losses on Friday. The barometer index, the S&P BSE Sensex, fell 125.27 points or 0.21% at 59,015.89. The Nifty 50 index lost 44.35 points or 0.25% at 17,585.15. Foreign portfolio investors (FPIs) bought shares worth Rs 1,552.59 crore, while domestic institutional investors (DIIs), were net sellers to the tune of Rs 1,398.55 crore in the Indian equity market on 17 September, provisional data showed.

Overseas, Asian stocks are trading lower on Monday, with shares of embattled Chinese developer China Evergrande Group continuing to drop. Markets in mainland China, Japan and South Korea are closed on Monday for holidays. US stocks dipped on Friday as investors remain cautious due to a resurgent Covid virus and a historical tendency for September to be a weak month for equities. Investor focus for the week will likely be on the U.S. Federal Reserves upcoming September meeting for clues on the central banks tapering of its easy monetary policy.

Meanwhile, the dollar began the week firmly on Monday with investors in a cautious mood ahead of several central bank meetings, headlined by the Federal Reserve, while looming catastrophe at indebted developer China Evergrande added to markets fragility. The US dollar index rose very slightly to a month-high 93.34.

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