Indian Rupee: Dollar Weakness Could Support

4 Aug 2022 , 09:22 AM

The Indian rupee is seen extending weakness on Thursday ahead of RBI rate decision due tomorrow. The Reserve Bank of Indias rate-setting panel on Wednesday began its three-day deliberations on the next bi-monthly monetary policy. The Monetary Policy Committee is scheduled to announce its decision on August 5. While a 25 bps hike is ruled out, market opinions are reportedly split between a 35 bps hike and a 50 bps hike. Meanwhile, weakness in dollar and lower crude prices could lend some support to the unit. On Wednesday, rupee slumped more than 60 paise to close at 79.15 against the US dollar, as disappointing macroeconomic data weighed on investor sentiment. Indias trade deficit widened to a record low USD 31.02 billion in July amid fall in exports. At the interbank foreign exchange market, the local currency opened lower at 78.70 and fell further to settle at the days low of 79.15. On Tuesday, the rupee rallied 53 paise its best single-day gain in over 11 months to close at an over one-month high of 78.53 against the US dollar. Domestic benchmark indices reversed intraday losses and ended with modest gains on Wednesday. The barometer index, the S&P BSE Sensex, rose 214.17 points or 0.37% to 58,350.53. The Nifty 50 index added 42.70 points or 0.25% to 17,388.15. Foreign portfolio investors (FPIs) bought shares worth Rs 765.17 crore, while domestic institutional investors (DIIs), were net sellers to the tune of Rs 518.42 crore in the Indian equity market on 3 August, provisional data showed. Overseas, Asian stocks are trading higher on Thursday following the rally on Wall Street. Investors move on from the tensions over U.S. House Speaker Nancy Pelosis controversial visit to Taiwan. Pelosi met with Taiwan President Tsai Ing-wen on Wednesday amid warnings from Beijing. Pelosi has since left the self-ruled island that China views as a runaway province to continue with her Asia tour. Wall Street ended sharply higher on Wednesday, with strong profit forecasts from PayPal and CVS Health Corp lifting sentiment. A better-than-expected services PMI reading for July gave investors confidence amid concerns about a U.S. recession. Powered by Commodity Insights