Indian Rupee: Expected To Open Higher

11 Jan 2022 , 09:12 AM

The Indian rupee is expected to extend gains against the dollar in early trades on Tuesday, 11 January 2022 amid weakness in the dollar overseas. However, foreign equities reversal flow into the Indian markets and pessimistic global cues could add pressure on the domestic currency.

On Monday, rupee surged to its strongest level in two months on the back of domestic benchmark G-sec yields tracking US treasury yields higher. At the interbank forex market, the local unit opened strong at 74.15 against the greenback and witnessed an intra-day high of 74.03 and a low of 74.21. It finally settled at 74.03, a rise of 31 paise over its previous close. In the previous session, the rupee had settled at 74.34 against the US dollar.

Domestic equity indices settled with robust gains on Monday. The barometer index, the S&P BSE Sensex, advanced 650.98 points or 1.09% to 60,395.63. The Nifty 50 index added 190.6 points or 1.07% to 18,003.30. Foreign portfolio investors (FPIs) sold shares worth Rs 124.23 crore, while domestic institutional investors (DIIs), were net buyers to the tune of Rs 481.55 crore in the Indian equity market on 10 January, provisional data showed.

Overseas, Asian stocks are mostly trading lower on Tuesday as investors remain concerned about inflation as well as likely policy tightening from central banks such as the U.S. Federal Reserve. Wall Streets three major indexes staged a late-session comeback on Monday as the Nasdaq managed to eke out a tiny gain and investors swooped in to hunt for bargains, while the S&P 500 and the Dow Jones Industrial Average finished well above their session lows.

Meanwhile, the dollar index fell back below the 96-mark level in early Asia, after having surged to a high of 96.23 overnight. The dollar index, which measures the currency against six counterparts, hovered around 95.88 early in the Asian session. Long term treasury yields in the US surged to a 2-year high after FOMC minutes showed the Fed might hike interest rates sooner than anticipated.

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