Indian Rupee: Likely To Come Under Pressure

24 Feb 2022 , 08:59 AM

The Indian rupee is likely to come under pressure in opening trades on Thursday, 24 February 2022 amid strength in dollar overseas, lifted by safe-haven flows after the US State Department said a Russian invasion of Ukraine remains potentially imminent and Ukraine declared a state of emergency. Besides elevated crude oil prices are also expected to weigh.

Domestic equity benchmarks ended with modest losses on Wednesday, extending declines for the sixth day in a row. The S&P BSE Sensex, fell 68.62 points or 0.12% at 57,232.06. The Nifty 50 index declined 28.95 points or 0.17% at 17,063.25. Foreign portfolio investors (FPIs) sold shares worth Rs 3,417.16 crore, while domestic institutional investors (DIIs), were net buyers to the tune of Rs 3,024.37 crore in the Indian equity market on 23 February, provisional data showed.

Overseas, Asian stocks fell on Thursday as investors continue to watch the escalating situation between Russia and Ukraine. US stocks fell sharply once again Wednesday, as escalating tensions between Russia and Ukraine push the major averages to fresh lows for the year so far.

Investors have been juggling brewing tensions between Russia and Ukraine. Ukraine warned its citizens against traveling to Russia and to leave the neighbouring country, if they are there. Meanwhile, the UK said that it was ready to impose more sanctions on Russia. Meanwhile, the Biden administration announced it will allow sanctions to move forward on the company in charge of building Russias Nord Stream 2 gas pipeline, following a first tranche of sanctions against Russia Tuesday that targets Russian banks, the countrys sovereign debt and three individuals.

Meanwhile, the U.S. dollar index – which gauges the currency against six major peers, rose as much as 0.20% to 96.42 for the first time since February 14. Riskier commodity-linked currencies also tumbled, succumbing to worsening risk sentiment after earlier in the week proving resilient due to high commodity prices. Ukraine has declared a state of emergency and Moscow began evacuating its Kyiv embassy, while the West slapped Russia with sanctions.

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