Indian Rupee: Likely To See Relief From Improved Domestic Macros

13 Jul 2022 , 09:22 AM

The Indian rupee is expected to stay on side-lines against the dollar with all eyes now tuned to the US report on consumer price index data later Wednesday. However, improved domestic macros could help the currency pare some of its sharp losses. Sharply lower crude oil prices are also likely to support rupee although poor investor sentiments could weigh. On Tuesday, rupee declined 15 paise to close at a new lifetime low of 79.60 (provisional) against the US dollar. At the interbank forex market, the local unit opened weak at 79.55 against the greenback and witnessed an intra-day high of 79.53 and a low of 79.66. It finally settled at 79.60 (provisional), down 15 paise over its previous close of 79.45. Meanwhile, Indias factory output, measured in terms of Index of Industrial Production (IIP), witnessed a growth of 19.6% in May 2022. IIP grew 7.1% in April 2022. The manufacturing sector recorded a growth of 20.6% in May. The mining sector rose by 10.9% and the electricity sector climbed 23.5%. Headline retail inflation rate, as measured by the Consumer Price Index (CPI), stood at 7.01% in June 2022 from 7.04% in May 2022, data released on 12 July 2022 by the Ministry of Statistics and Programme Implementation showed. Domestic key equity indices ended with deep cuts on Tuesday amid negative global cues. The barometer index, the S&P BSE Sensex, was down 508.62 points or 0.94% to 53,886.61. The Nifty 50 index fell 157.70 points or 0.97% to 16,058.30. Foreign portfolio investors (FPIs) sold shares worth Rs 1,565.68 crore, while domestic institutional investors (DIIs), were net buyers to the tune of Rs 140.71 crore in the Indian equity market on 12 July, provisional data showed. Overseas, Asian stocks are trading mixed on Wednesday as China releases trade data, and the Bank of Korea and Reserve Bank of New Zealand hike rates. Thailands stock exchange is closed for a holiday Wednesday. The Bank of Korea raised rates by 50 basis points for the first time, bringing the rate to 2.25%. Thats in line with analyst expectations. The Reserve Bank of New Zealand also increased rates by 50 basis points to 2.5%. U.S. stocks dropped on Tuesday as worries over global economic growth dented investor appetite for risk assets. PepsiCo kicked off the corporate earnings season on Tuesday, reporting a better-than-expected quarterly profit and revenue and raising its revenue outlook for the year Meanwhile, the Organization of the Petroleum Exporting Countries (OPEC) forecast that world oil demand will rise further next year, but at a slightly slower rate than in 2022, with consumption supported by better containment of the COVID-19 pandemic and still-robust global economic growth. In a monthly report, the OPEC said it expects world oil demand to rise by 2.7 million barrels per day (bpd) in 2023. This years growth forecast was left unchanged at 3.36 million bpd. Powered by Commodity Insights