Indian Rupee: Awaits Fed Decision For Further Cues

27 Jul 2022 , 09:13 AM

Muted domestic equities and concerns over the hawkish US Fed are seen weighing on the Indian rupee in early trades on Wednesday, 27 July 2022. Dollar likely to rebound tracking US treasury yields as markets brace for Fed interest rate decision later in the global day are also expected to add pressure on the domestic currency. The dollar index which measures the greenback against a basket of other major currencies was trading at 106. 88 while treasury yields were up nearly 1% at 2.8%. On Tuesday, the local unit opened at 79.73 against the greenback and finally settled at 79.78, unchanged from its previous close. During the day the local unit witnessed an intra-day high of 79.72 and a low of 79.81 against the American currency. On Monday, the rupee rose by 12 paise to close at 79.78 against the US dollar. Domestic equity barometers ended with deep losses on Tuesday. The barometer index, the S&P BSE Sensex, fell 497.73 points or 0.89% to 55,268.49. The Nifty 50 index lost 147.15 points or 0.88% to 16,483.85. Foreign portfolio investors (FPIs) sold shares worth Rs 1,548.29 crore, while domestic institutional investors (DIIs), were net buyers to the tune of Rs 999.36 crore in the Indian equity market on 26 July, provisional data showed. Overseas, Asian stocks are trading lower on Wednesday as Australias inflation rose and investors looked forward to the Feds policy decision. Prices in Australia rose 6.1% in the second quarter compared to the same period a year ago, up from 5.1% in the first quarter of the year. US stocks ended sharply lower Tuesday as a profit warning by Walmart dragged down retail shares and exceptionally weak consumer confidence data also fueled fears about spending. At the end of its two-day monetary policy meeting on Wednesday, the Fed is widely expected to raise its main interest rate by 0.75 percentage points. The International Monetary Fund (IMF) has cut its gross domestic product (GDP) growth forecast for India for the current financial year by 80 basis points to 7.4%. A similar downgrade has been made to the growth forecast for FY24, which now stands at 6.1% as against 6.9% earlier. For India, the revision reflects mainly less favourable external conditions and more rapid policy tightening, the IMF said on July 26 in an update to its World Economic Outlook report. The IMF on Tuesday cut its global GDP forecasts for 2022 and 2023. It now expects growth to come in at 3.2% this year, 0.4 percentage points lower than its April projection. Powered by Commodity Insights