Indian Rupee: Likely To Stay Cautious

4 Apr 2022 , 08:47 AM

The Indian rupee is expected to stay cautious against the dollar in early trades on Monday, 04 April 2022 as talk of new sanctions kept the broad mood watchful. Besides, dollar seen firming up could also add pressure to the local unit. For the week, spotlight will be taken by the developments around the war in Ukraine and central banks tightening plans.

On Thursday, rupee advanced by 16 paise to close at 75.74 against the US dollar. The local unit, however, closed the 2021-22 fiscal with overall losses of 3.61 per cent or 264 paise against the American currency due to a stronger dollar and surging crude oil prices. At the interbank forex market, the local unit opened at 75.67 against the greenback and witnessed an intra-day high of 75.66 and a low of 75.83. The rupee finally settled at 75.74, registering a rise of 16 paise over its previous close. On Wednesday, the rupee dropped 17 paise to close at 75.90 against the US dollar.

Domestic benchmark indices ended with robust gains on Friday, supported by strength in banks, financial services and auto stocks. The barometer index, S&P BSE Sensex soared 708.18 points or 1.21% at 59,276.69. The Nifty 50 index surged 205.70 points or 1.18% at 17,670.45. Foreign portfolio investors (FPIs) bought shares worth Rs 1,909.78 crore, while domestic institutional investors (DIIs), were net sellers to the tune of Rs 183.79 crore in the Indian equity market on 1 April, provisional data showed.

On the macro front, Indias merchandise exports spurt to a record high of $418 billion in the 2021-22 fiscal on higher shipments of petroleum products, engineering goods, gem and jewellery and chemicals, according to official data released on Sunday. Indias annual median GDP growth forecast stood at 7.4% for 2022-23, according to a survey by the Federation of Indian Chambers of Commerce and Industry (FICCI) released on April 3. The Economic Outlook Survey estimates a minimum and maximum growth of 6% and 7.8%, respectively.

Overseas, Asian stocks got off to a cautious start on Monday amid talk of yet more sanctions against Russia over its invasion of Ukraine. Markets in mainland China are closed on Monday and Tuesday this week for holidays. US stocks were modestly higher on Friday as investors assessed a new quarter of trading and a troublesome bond market recession indicator.

Meanwhile, the US dollar index was held near 98.58 levels in early Asia on Monday. The dollar made a firm start to the week as Treasury yields rose with expectations of rapid-fire U.S. interest rate hikes, while talk of bans on Russian gas kept the euro within sight of its 2022 lows. A closely watched part of U.S. Treasury yields inverted on Friday as short-term rates jumped following the release of jobs data stateside, raising concerns over a potential recession on the horizon. The benchmark 10-year Treasury yield last sat at 2.3895%, while the rate on the 2-year Treasury note was at 2.4625%. Yields move inversely to prices, with 1 basis point equal to 0.01%.

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