Indian Rupee: Higher Crude Prices Likely To Weigh

7 Feb 2022 , 09:00 AM

Sharply higher crude oil prices coupled with recovery in dollar overseas is expected to weigh down the Indian rupee in opening trades on Monday, 07 February 2022. Besides, sustained foreign fund outflows from the Indian markets and upcoming RBI monetary policy later this week will keep the currency anxious.

The Reserve Bank of Indias Monetary Policy Committee will meet on February 8-10 instead of February 7-9, the central bank said on February 6. The change in the committees meeting schedule comes after February 7 was declared as public holiday by the Maharashtra state government following the demise of renowned singer Lata Mangeshkar.

On Friday, rupee surged 18 paise to close at 74.70 against the US dollar tracking the weakness of the American currency in the overseas market. At the interbank forex market, the local unit opened strong at 74.71 against the greenback and witnessed an intra-day high of 74.68 and a low of 74.77. It finally settled at 74.70, a rise of 18 paise over its previous close. In the previous session, the rupee had settled at 74.88 against the greenback. During the week, the rupee has appreciated 37 paise against the American currency.

Domestic benchmark indices ended with small losses on Friday. The barometer index, the S&P BSE Sensex, fell 143.25 points or 0.24% at 58,644.82. The Nifty 50 index lost 43.9 points or 0.25% at 17,516.30. Foreign portfolio investors (FPIs) sold shares worth Rs 2,267.86 crore, while domestic institutional investors (DIIs), were net buyers to the tune of Rs 621.98 crore in the Indian equity market on 4 February, provisional data showed.

Overseas, Asian stocks are trading lower on Monday, with mainland China markets reopening following the Lunar New Year holidays last week. Stunningly strong US jobs data soothed concerns about the global economy but also added to the risk of an aggressive tightening by the Federal Reserve. Investors continued to monitor the situation around Ukraine, with White House national security adviser Jake Sullivan reportedly warning Sunday that a Russian invasion could be imminent. In US, the S&P 500 and Nasdaq Composite jumped Friday as continued strength in earnings reports extended the tech-led rebound from the January rout.

Meanwhile, the greenback is seen recovering slowly in early Asia after having dropped the most since early November 2021 on a weekly basis. Fridays Dollar rebound could be taken from positive surprise from the US Bureau of Labor Statistics (BLS), concerning January employment data. The headline Nonfarm Payrolls (NFP) rose by 467K versus the median forecast for a 150K rise and 510K revised prior while the Unemployment Rate rose to 4.0% from 3.9% in December, compared to expectations for a no-change figure.

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