Indian Rupee: Awaits US Fed For Further Cues

4 May 2022 , 08:42 AM

The Indian rupee is expected to stay cautious on Wednesday, 04 May 2022 awaiting cues from the Federal Reserve later in the global day. Besides, the dollar index hovering near a 20-year peak on expectations of aggressive rate hike by the US central bank with inflation running at its fastest pace in 40 years is expected to weigh down the domestic unit.

On Monday, rupee pared initial gains to settle almost flat against the US dollar. At the interbank foreign exchange market, the rupee opened slightly higher at 76.48 against the American dollar and gained further ground to trade at 76.35. It oscillated between a high of 76.35 and a low of 76.51 during the session. The rupee finally settled at 76.51 against the dollar, showing a marginal fall of 1 paisa.

Domestic equity benchmarks ended with small losses on Monday, extending losses for the second day. The barometer index, S&P BSE Sensex declined 84.88 points or 0.15% at 56,975.99. The Nifty 50 index fell 33.45 points or 0.20% at 17,069.10. The domestic stock market remained closed on Tuesday, 3 May 2022, on account of Ramzan Eid.

Foreign portfolio investors (FPIs) sold shares worth Rs 1,853.46 crore, while domestic institutional investors (DIIs), were net buyers to the tune of Rs 1,951.10 crore in the Indian equity market on 2 May, provisional data showed.

Overseas, Asian stocks are trading mixed on Wednesday, with investors looking ahead to the U.S. Federal Reserves interest rate decision expected later stateside. Markets in Japan and mainland China are closed on Wednesday for holidays. Wall Street stocks ended higher on Tuesday after a choppy session in which each of the major indexes fluctuated between gains and losses as a key meeting of the Federal Reserve got under way.

Meanwhile, the US dollar was at 103.47 against a basket of currencies on Tuesday, as investors evaluated how much of the Federal Reserves expected move to hike rates this week and beyond was already priced in. As per reports, the U.S. Federal Reserve is expected to raise interest rates Wednesday for the second time since 2018, boosting the fed funds target rate by a half-percentage point. The central bank is also expected to launch a program to reduce its massive bond holdings by $95 billion a month, starting in June.

Powered by Commodity Insights