Indian Rupee: All Eyes On RBI

8 Apr 2022 , 08:52 AM

The Indian rupee is likely to stay cautious in early trades on Friday, 08 April 2022 awaiting RBI policy outcome. Besides, a bolstered American currency amid hawkish stance of the US Federal Reserve, negative trend in domestic equities and elevated oil prices amid the Russia-Ukraine conflict are seen adding pressure on the local unit.

The Reserve Bank of India (RBI) Governor-headed rate setting panel — Monetary Policy Committee (MPC) — started its first meeting of the 2022-23 fiscal on 6 April 2022. The outcome will be announced today, 8 April 2022. Investors are awaiting the RBIs policy decision today amid expectations that the central bank might retain status quo on interest rate. In the previous meeting, MPC left the key policy rates unchanged.

On Thursday, rupee declined 11 paise to close at 75.95 against the US dollar. At the interbank foreign exchange, the rupee opened lower at 75.88 against the US dollar, then slipped further to quote 75.99. It finally settled at 75.95, down 11 paise over its previous close. On Wednesday, the rupee tanked 55 paise, its steepest single-day fall in a month, to close at a one-week low of 75.84 against the US dollar.

Domestic key equity benchmarks extended losses for the third session on Thursday. The S&P BSE Sensex fell 575.46 points or 0.97% at 59,034.95. The Nifty 50 index shed 168.10 points or 0.94% at 17,639.55. Foreign portfolio investors (FPIs) sold shares worth Rs 5,009.62 crore, while domestic institutional investors (DIIs), were net buyers to the tune of Rs 1,774.70 crore in the Indian equity market on 7 April, provisional data showed.

Overseas, Asian stocks are trading lower on Friday after a comeback on Wall Street as investors continued to digest the Feds plans to fight inflation. US stocks rebounded on Thursday, following back-to-back losing sessions, as investors reassessed the Federal Reserves latest plans to tighten monetary policy and combat rising inflation. Investors on Thursday continued to monitor the Ukraine-Russia war, as Ukraine asks NATO for more weapons and the EU and U.S. weigh a ban on Russian coal. Meanwhile, the U.S. Senate passed a bill banning Russian oil and gas imports.

Meanwhile, the dollar extended higher on Friday, reaching a new near two-year peak against a basket of peers and a one-month high versus the euro, supported by the prospect of a more aggressive pace of Federal Reserve interest rates hikes. The dollar index rose as high as 99.88 in early Asia trade, its best level since May 2020.

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