Indian Rupee: All Eyes On RBI

10 Feb 2022 , 09:05 AM

The Indian rupee is expected to stay on backfoot in opening trades on Thursday, 10 February 2022 ahead of RBIs monetary policy decision due later in the day. However, easing crude oil prices and weakness in the dollar overnight is expected to keep rupee supported. The Reserve Bank of India (RBI)s rate-setting Monetary Policy Committee (MPC) meeting commenced on 8 February 2022 and the outcome would be announced today, 10 February 2022.

On Wednesday, rupee declined by 5 paise to close at 74.79 against the US dollar. At the interbank foreign exchange, the rupee opened at 74.70 against the American dollar, and later witnessed an intra-day high of 74.68 and a low of 74.87 against the greenback. The local unit finally ended the day at 74.79, down 5 paise from the previous close of 74.74.

Domestic benchmarks indices settled with robust gains on Wednesday, tracking strong global cues. The barometer index, the S&P BSE Sensex, advanced 657.39 points or 1.14% to 58,465.97. The Nifty 50 index added 197.05 points or 1.14% to 17,463.80. Foreign portfolio investors (FPIs) sold shares worth Rs 892.64 crore, while domestic institutional investors (DIIs), were net buyers to the tune of Rs 1,793.35 crore in the Indian equity market on 9 February, provisional data showed.

On the political front, developments in the upcoming assembly polls in Uttar Pradesh, Uttarakhand, Goa, Punjab, and Manipur will be closely watched. Polls in all the five states will be held from today, 10 February 2022 till 7 March 2022 in seven phases. The counting of votes and the result will be declared on March 10.

Overseas, Asian stocks are trading mixed on Thursday as investors await the release of U.S. consumer inflation data. U.S. stocks rose on Wednesday as tech shares led a broad rally, clawing back some of their losses after a rough start to the year. Meanwhile, investors await the release of U.S. consumer inflation data expected Thursday for clues on how the Federal Reserve could react to the rising price pressures.

Meanwhile, the US dollar continues to be under pressure awaiting consumer prices data due on Thursday that may offer new clues on the pace of Federal Reserve monetary tightening. The dollar index, that tracks the greenback against a basket of currencies fell to 95.55, after bouncing off a 2-1/2-week low of 95.136 reached Friday. It touched the highest since July 2020 at 97.441 at the end of last month.

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