Indian Rupee: Likely To Be Supported By Dollar Weakness

18 Jul 2022 , 09:21 AM

Weakness in the US dollar in early Asia on Monday is expected to support gains in the Indian rupee. The dollar fell as investors evaluated how high the Federal Reserve is likely to raise interest rates by when it meets later this month and as investors took profits after a strong rally that sent the greenback to a two-decade high on Thursday. The greenback has jumped as the Fed is expected to raise rates faster and further than peer central banks as inflation soars to four-decade highs. INR ended at Rs 79.82 against the dollar on Friday as compared to previous close at 79.99. Overseas, Asian stocks are trading higher on Monday as investors looked ahead to announcements later in the week. Domestic stock indices ended near the days high with modest gains on Friday. The barometer index, the S&P BSE Sensex, was up 344.63 points or 0.65% to 53,760.78. The Nifty 50 index gained 110.55 points or 0.69% to 16,049.20. Foreign portfolio investors (FPIs) sold shares worth Rs 1,649.36 crore, while domestic institutional investors (DIIs), were net buyers to the tune of Rs 1,059.46 crore in the Indian equity market on 15 July, provisional data showed. US stocks closed sharply higher on Friday fueled by upbeat earnings, strong economic data and easing fears of a larger-than-expected interest rate hike by the Federal Reserve. Finance chiefs at the Group of 20 meeting in Bali strongly condemned the war in Ukraine and expressed concern over an alarming increase of food and energy insecurity. Many members agreed that the recovery of the global economy has slowed and is facing a major setback as a result of Russias war against Ukraine, which was strongly condemned. Broadly, all G-20 central banks agreed to tackle inflation and calibrate monetary policies that would rein in soaring prices. Global interest rates will likely keep rising until 2023 when heated prices will begin to cool in response to the actions from central banks, according to Kristalina Georgieva, managing director of the International Monetary Fund. Commodity prices, such as oil, may have leveled out and started sliding in recent months, but Georgieva said that they will do so in response to recession risks and not necessarily because inflation has been tamed. Powered by Commodity Insights