Indian Rupee: Dollar Strength To Weaken Sentiment

6 Jul 2022 , 09:10 AM

Accruing strength in the dollar is likely to dampen rupee sentiments that are already lingering at sharp lows. The dollar index climbed to a near two-decade high of 106.79, gaining more than 1.5%, amid rising prospects of a series of sharp interest rate hikes by the Federal Reserve. Weakening risk appetite amid mounting tensions of recession is expected to further weaken the currency. On Tuesday, rupee fell by 41 paise to close at a fresh lifetime low of 79.36 (provisional) against the US dollar amid a strong greenback overseas and unrelenting foreign fund outflows. At the interbank forex market, the local unit opened at 79.04 against the greenback and witnessed an intra-day high of 79.02 and a low of 79.38. It finally settled at 79.36 (provisional), down 41 paise over its previous close. The key equity benchmarks ended with minor cuts on Tuesday amid high volatility. The barometer index, the S&P BSE Sensex, slipped 100.42 points or 0.19% to 53,134.35. The Nifty 50 index lost 24.50 points or 0.15% to 15,810.85. Foreign portfolio investors (FPIs) purchased shares worth Rs 1,295.84 crore, while domestic institutional investors (DIIs), were net sellers to the tune of Rs 257.59 crore in the Indian equity market on 5 July 2022, provisional data showed. Asian shares dropped on Wednesday despite Wall Street recovering most of its losses by the close. US stock indices initially fell sharply on Tuesday before rallying in the afternoon. Concerns about a possible recession in the US weighed on investor sentiment but lower interest rates appeared to boost the tech sector. The Nasdaq Composite ended the session 1.75% higher at 11,322.24, while the S&P 500 was up 0.16% at 3,831.39. The Dow Jones Industrial Average, however, shed 129.44 points, or 0.4%. Crude oil futures rose after plunging overnight. In the commodities market, Brent crude for September 2022 settlement was up $1.25 or 1.22% at $104.02 a barrel. The contract slumped 7.94% on Tuesday to settle at $102.77 a barrel. Powered by Commodity Insights