Indian Rupee: Dollar Strength Could Weigh

18 Feb 2022 , 09:15 AM

Geopolitical tensions on Russia-Ukraine front pushed investors towards safe-haven dollar in early Asia which could weigh down the Indian rupee in opening trades on Friday, 18 February 2022. Besides, sustained foreign fund outflows from the domestic market could add to rupee woes.

On Thursday, rupee declined by 7 paise to close at 75.11 against the US currency. At the interbank foreign exchange, the rupee opened at 74.94 against the American dollar but later dropped to a low of 75.18 against the greenback. The local unit was quoted at 75.11 at close, down 7 paise from the previous close.

Domestic benchmark indices ended with small cuts on Thursday, amid mixed global cues. The S&P BSE Sensex, fell 104.67 points or 0.18% at 57,892.01. The Nifty 50 index slipped 17.60 points or 0.1% at 17,304.60. Foreign portfolio investors (FPIs) sold shares worth Rs 1,242.10 crore, while domestic institutional investors (DIIs), were net buyers to the tune of Rs 901.10 crore in the Indian equity market on 17 February, provisional data showed.

Overseas, Asian stocks are trading lower on Friday after an exchange of fire in eastern Ukraine and renewed U.S. warnings of an imminent Russian invasion had investors looking for safety ahead of the weekend. US stocks slumped Thursday amid heightened tensions between Russia and Ukraine with confused investors dumping risky assets and rotating into bonds. Russian-backed rebels and Kyivs forces reportedly traded accusations that each had fired across a ceasefire line on Thursday and U.S. president Joe Biden said his sense was that a Russian invasion will happen in the next several days.

Meanwhile, the US dollar gained in early Asia on Friday as demand for the safe haven increased as concerns on Russia-Ukraine front intensified. Ukrainian forces and pro-Russian separatists exchanged fire on Thursday, renewing concerns of an imminent Russian invasion. U.S. President Joe Biden accused Moscow is preparing a pretext to justify a possible attack. The US dollar Index that tracks the greenback against a basket of other currencies inched up 0.02% to 95.825.

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