Indian Rupee: Global Tensions To Weigh

15 Feb 2022 , 09:12 AM

Deep losses in the stock markets amid geopolitical tensions and elevated crude oil prices is expected to continue to weigh on the local unit in early trades on Tuesday, 15 February 2022. However, dollar coming off its previous day highs could lend some much needed support for the local currency. Moreover, official data released after market hours showed that retail inflation rose to 6.01 per cent in January on an annual basis and breached the RBIs upper tolerance level, mainly due to higher prices of certain food items.

On Monday, rupee slumped further by 24 paise to close at over nine-week low of 75.60 against the US currency. At the interbank foreign exchange, the rupee opened at 75.53 against the American dollar, and later witnessed an intra-day high of 75.37 and a low of 75.64 against the greenback. The local unit finally ended the day at 75.60, the lowest closing level since December 20 and a fifth consecutive session of loss. In the five sessions, the rupee has declined 68 paise. On Friday, the rupee had plunged by 21 paise to a nearly seven-week low of 75.36 against the US currency on forex outflows and a strong dollar after a spike in inflation in the US boosted expectations of an aggressive rate hike by the Federal Reserve.

The domestic benchmark indices ended with substantial losses on Monday. The S&P BSE Sensex, tanked 1,747.08 points or 3% at 56,405.84. The Nifty 50 index slipped 531.95 points or 3.06% at 16,842.80. Foreign portfolio investors (FPIs) sold shares worth Rs 4,253.70 crore, while domestic institutional investors (DIIs), were net buyers to the tune of Rs 2,170.29 crore in the Indian equity market on 14 February, provisional data showed.

Overseas, Asian stocks are trading mixed on Tuesday as investors in the region continue to monitor tensions between Russia and Ukraine. The Dow Jones Industrial Average and S&P 500 retreated on Monday as investors evaluated concerns about the Federal Reserves plan for interest rate hikes and tensions between Russia and Ukraine. Global markets have been kept on edge amid fears of a Russian attack on Ukraine, with the U.S. closing its embassy in Kyiv. US Secretary of State Antony Blinken cited the ?dramatic acceleration in the buildup of Russian forces? on Ukraines border.

Meanwhile, the dollar index, which tracks the greenback against six peers was at 96.19, off Mondays two-week high. Tensions in eastern Europe weighed on the euro on Tuesday and pushed demand for the dollar and the safe-haven yen, while the greenback was also helped by debate about more aggressive US interest rate hikes.

Powered by Commodity Insights