Indian Rupee: Expected To See Some Relief

15 Mar 2022 , 09:07 AM

Easing international crude oil prices and dollar weakness ahead of the FOMC is expected to provide support to the Indian rupee on Tuesday, 15 March 2022. However, weak global sentiments amid constant conflict on Russia-Ukraine front and rising Covid cases in China could weigh down the local unit.

Meanwhile, Indias wholesale price-based inflation in February rose to 13.11 per cent on hardening of prices of crude oil and non-food items, even though food articles softened. After two months of mild easing, WPI inflation accelerated in February and remained in double digits for the 11th consecutive month, beginning April 2021.

On Monday, rupee declined by 11 paise to close at 76.55 against the US dollar. At the interbank foreign exchange market, the rupee opened at 76.63 against the American dollar. During the day, it swung between a high of 76.52 and a low of 76.69. The local unit finally settled at 76.55 against the dollar, down 11 paise from the previous close.

Domestic benchmark indices ended with strong gains, extended their winning run to fifth trading session. The S&P BSE Sensex, advanced 935.72 points or 1.68% at 56,486.02. The Nifty 50 index gained 240.85 points or 1.45% at 16,871.30. Foreign portfolio investors (FPIs) sold shares worth Rs 176.52 crore, while domestic institutional investors (DIIs), were net buyers to the tune of Rs 1,098.62 crore in the Indian equity market on 14 March, provisional data showed.

Overseas, Asian stocks were in the red on Tuesday as surging COVID-19 cases in China hit the confidence of investors who are already worried about the Ukraine war and the first U.S. interest rate rise in three years, which could come this week. Major US stock indexes closed mostly lower on Monday as investors sold tech and big growth names ahead of this weeks Federal Reserve meeting and an expected hike in interest rates.

Wall Street kept an eye on the conflict between Russia and Ukraine, as the two countries resumed talks on Monday. A Ukrainian official reportedly said the countrys objectives were to secure a ceasefire and an immediate withdrawal of Russian troops, along with other security guarantees. Hopes that talks between Russia and Ukraine due to resume on Tuesday could provide a resolution to the conflict prompted a sharp fall in global oil prices.

Fighting has intensified around Ukraines capital, Kyiv, while Russian forces bombard cities across the country, killing civilians who are unable to escape. Investors were also focused on the Fed, which is expected to raise its target fed funds rate by a quarter-percentage point from zero at the end of its two-day meeting Wednesday

Meanwhile, the U.S. Dollar Index that tracks the greenback against a basket of other currencies inched down at 98.91 with focus firmly on the U.S. Federal Reserves March policy decision.

Powered by Commodity Insights