Indian Rupee: Expected To Stay Cautious

8 Mar 2022 , 08:58 AM

Escalating tensions between Russia and Ukraine that is driving crude oil prices at an elevated level adding to heightened worries about domestic inflation and wider trade deficits is expected to keep the Indian rupee cautious in opening trades on Tuesday, 08 March 2022. Besides, dollar strength, sustained foreign fund outflows and a lacklustre trend in domestic equities could also weighed on investor sentiment.

On Monday, rupee tanked 84 paise to close sharply lower at 77.01 against the dollar. At the interbank foreign exchange market, the rupee opened at 76.85 against the American currency but lost ground and settled for the day at a record low of 77.01, down 84 paise from the previous close. On Friday, the rupee fell by 23 paise to close at 76.17 ? its lowest closing level since December 15, 2021.

Domestic benchmark indices closed near the days low with steep losses on Monday, tracking weak global cues. Soaring crude oil prices amid ongoing Russia-Ukraine crisis continued to spook investors. The barometer index, the S&P BSE Sensex, dropped 1,491.06 points or 2.74% at 52,842.75. The Nifty 50 index fell 382.20 points or 2.35% at 15,863.15. Foreign portfolio investors (FPIs) sold shares worth Rs 7,482.08 crore, while domestic institutional investors (DIIs), were net buyers to the tune of Rs 5,331.03 crore in the Indian equity market on 7 March, provisional data showed.

Overseas, Asian stocks are trading lower on Tuesday, following heavy losses for the major indexes overnight stateside as the Russia-Ukraine war continues to keep investors on edge. Wall Streets main indices fell sharply on Monday as the prospect of a ban on oil imports from Russia sent crude prices soaring and fuelled concerns about rising inflation.

A Western ban on Russian oil imports may more than double the price to $300 a barrel and prompt the closure of the main gas pipeline to Germany, Moscow reportedly warned on Monday, as talks on Ukraine hardly advanced amid efforts to agree on civilian safe passage. Brent, the international benchmark, briefly hit more than $139 a barrel, its highest level since 2008. A rejection of Russian oil would lead to catastrophic consequences for the global market, said Russian Deputy Prime Minister Alexander Novak.

Meanwhile, the US dollar continued to stay firm amid nerves the war and its economic consequences could spread. The dollar index, that measures the greenback against a basket of currencies was holding at 99.09 in early Asia.

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