Indian Rupee: Expected To Stay In Narrow Range

Indian Rupee: Expected To Stay In Narrow Range

Jul 23, 2021 08:07 IST capital market

Optimistic sentiment that the surge in coronavirus may not impact global economic recovery and continued support by leading central banks is keeping risk appetite resilient. However, foreign investors selling in Indian markets and dollar seen recovering overseas could add some pressure on the local currency to stay in narrow range on Friday, 23 July 2021.

On Thursday, rupee strengthened against the US currency for the second straight session, closing 15 paise higher at 74.46 amid a rally in the domestic stocks. At the interbank forex market, the rupee opened at 74.46, and hit an intra-day high of 74.33 and a low of 74.53. It finally finished at 74.46, higher by 15 paise over its last close. On Tuesday, the rupee had settled at 74.61 against the US dollar. Forex market was closed on Wednesday on account of Bakri Id. In the two straight sessions, the rupee has appreciated 42 paise against the American currency.

Domestic equity benchmark indices ended with robust gains on Thursday. The barometer index, the S&P BSE Sensex, soared 638.70 points or 1.22% at 52,837.21. The Nifty 50 index added 191.95 points or 1.23% at 15,824.05. Foreign portfolio investors (FPIs) sold shares worth Rs 247.59 crore, while domestic institutional investors (DIIs), were net buyers to the tune of Rs 942.55 crore in the Indian equity market on 22 July, provisional data showed.

Overseas, Asian stocks are trading mixed on Friday as investors monitored Chinese tech stocks in Hong Kong after regulatory concerns resurfaced. Markets in Japan are closed on Friday for a holiday. Tech shares led U.S. stocks higher Thursday, despite an unexpected jump in jobless claims that resurfaced some concerns about the economy and sent bond yields lower. Investors jumped back into their favourite tech stocks as optimism about the sector grows ahead of big earnings reports next week for some of the largest names in the space.

Meanwhile, the European Central Bank on Thursday said interest rates would stay at their current record low levels until it sees inflation durably reaching the banks new target of 2%. The 25-member governing council expects the key ECB interest rates to remain at their present or lower levels until it sees inflation reaching 2% well ahead of the end of its projection horizon and durably for the rest of the projection horizon, the bank said in a statement, adding that this may also imply a transitory period in which inflation is moderately above target.

Meanwhile, the dollar index is seen recovering back to the end of the week, currently quoting at 92.84 in early Asian trades on Friday. That was, however, off the 3-1/2-month high of 93.194 hit on Wednesday as strong Wall Street earnings helped investors regain some of the confidence lost to earlier worries the Delta variant of the coronavirus could derail the global recovery.

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