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Indian Rupee: Strength In Dollar Likely To Weigh

Indian Rupee: Strength In Dollar Likely To Weigh

January 19, 2022 9:00 IST | capital market

Strength in the dollar overseas ahead of the Fed meeting next week is likely to continue to keep the Indian rupee under pressure in early trades on Wednesday, 19 January 2022. Besides, elevated crude oil prices and pessimistic global cues could further weigh on investor sentiments.

On Tuesday, rupee extended decline for the third consecutive session by 33 paise to close at 74.58 against the US dollar. At the interbank foreign exchange market, the local currency opened at 74.36 against the American currency and witnessed an intra-day low of 74.60 during the session. The rupee finally settled at 74.58, down 33 paise over its previous close of 74.25 against the greenback.

Domestic equity benchmarks ended with deep cuts on Tuesday. The barometer index, the S&P BSE Sensex, slumped 554.05 points or 0.90% to 60,754.86. The Nifty 50 index lost 195.05 points or 1.07% to 18,113.05. Foreign portfolio investors (FPIs) sold shares worth Rs 1,254.95 crore, while domestic institutional investors (DIIs), were net sellers to the tune of Rs 220.20 crore in the Indian equity market on 18 January, provisional data showed.

Overseas, Asian stocks are trading lower on Wednesday following an overnight sell-off on Wall Street. US stocks fell sharply Tuesday as government bond yields hit Covid-era highs and after Goldman Sachs reported disappointing earnings. Microsoft announced that the software giant will buy video game company Activision Blizzard in an all-cash transaction valued at $68.7 billion.

Spiking US treasury yields has lifted the dollar with all focus next weeks meeting of the U.S. Federal Reserve, which is highly anticipated to signal a rate hike in March for the first time in more than three years. The dollar index stayed firm in early Asian trades, after posting its best daily gain in two weeks in the previous session and rising to a one-week high against a basket of currencies on Wednesday. The dollar index, that tracks the greenback against a basket of currencies was seen quoting at 95.76, following a decline to 94.63 last week. The U.S. 10-year yield hit a two-year peak of 1.88% overnight.

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