Indian Rupee: Likely To Stay Under Pressure

16 Feb 2022 , 09:08 AM

Strength in dollar in early Asia after dipping overnight could add some pressure on the Indian rupee in opening trades on Wednesday, 16 February 2022 although retreating crude prices could support. Besides, improving global sentiments as tensions appear to ease on Ukraine front could also help to limit some losses.

On Tuesday, rupee snapped its four-day losing streak to close 29 paise higher at 75.31 against the US dollar. At the interbank forex market, the local unit opened on a weak note at 75.60 against the greenback and witnessed an intra-day high of 75.31 and a low of 75.72. It finally settled at 75.31, a rise of 29 paise over its previous close. On Monday, the rupee had slumped by 24 paise to close at an over nine-week low of 75.60.

Domestic benchmark indices ended with robust gains on Tuesday after registering steep losses in the past two sessions. The S&P BSE Sensex, soared 1,736.21 points or 3.08% at 58,142.05. The Nifty 50 index surged 509.65 points or 3.03% at 17,352.45. Foreign portfolio investors (FPIs) sold shares worth Rs 2,298.76 crore, while domestic institutional investors (DIIs), were net buyers to the tune of Rs 4,411.60 crore in the Indian equity market on 15 February, provisional data showed.

Overseas, Asian stocks are trading higher on Wednesday, as investors react to Chinas inflation data. Meanwhile, tensions appeared to ease between Russia and Ukraine, boosting markets. Wall Street ended sharply higher on Tuesday, as signs of de-escalating tensions along the Russia-Ukraine border sparked a risk-on session. Russias government announced Tuesday that Moscow is starting to return some troops at the Ukrainian border, though NATOs chief warned that the military alliance has so far ?not seen any sign of de-escalation on the ground from the Russian side.?

Meanwhile, the dollar index which measures the greenback against six major peers lost ground below the 96 mark overnight but recovered slightly in early Asian trades on Wednesday. The greenback retreated overnight as the Ukraine geopolitical tensions appeared to ease, but expectations of an aggressive Fed hike cycle could continue to keep the dollar on strong footing.

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