Indian Rupee: Massive Dollar Strength To Weigh

27 Apr 2022 , 08:48 AM

The Indian rupee is likely to shed gains in opening trades on Wednesday, 27 April 2022 tracking broad strength in American currency that surged to fresh two-year highs overnight. Meanwhile, crude prices extended gains in early trades amid geopolitical tensions with Russia warning of gas supply cuts to Poland and Bulgaria. This could further dampen rupee sentiments.

On Tuesday, rupee rose by 4 paise to 76.60 against the US dollar, snapping its two-day losing streak. At the interbank forex market, the rupee opened at 76.48 against the greenback and moved in a range of 76.43 to 76.69 in the day trade. The rupee traded at 76.60, higher by 4 paise over its previous close of 76.64.

Domestic benchmark indices ended with strong gains on Tuesday, snapping a two-day losing streak. The barometer index, S&P BSE Sensex surged 776.72 points or 1.37% at 57,356.61. The Nifty 50 index jumped 246.85 points or 1.46% at 17,200.80. Foreign portfolio investors (FPIs) sold shares worth Rs 1,174.05 crore, while domestic institutional investors (DIIs), were net buyers to the tune of Rs 1,643.84 crore in the Indian equity market on 26 April, provisional data showed.

Overseas, Asian stocks are trading mixed on Wednesday after overnight losses saw the tech-heavy Nasdaq Composite sliding to a fresh low for 2022. Chinas industrial profits rose 8.5% year-on-year in the January-March period, official data showed Wednesday. U.S. stocks fell sharply on Tuesday with shares selling off into the close, as investors dumped equities on fears of an economic slowdown.

Worries about the global economy loomed. Investors are worried about a Covid surge in China. Regarding the war in Ukraine, a top Russian official said the threat of nuclear war is real. Plus, high inflation in the U.S. is denting demand for goods from houses to sneakers.

Meanwhile, the US dollar index, which measures the greenback against a basket of six major currencies, hit a high of 102.37 overnight, the strongest it has been since March 2020. The American currency stood at its highest level since the early days of the pandemic on Wednesday and was heading for its best month since 2015, supported by the prospect of U.S. rate hikes and on safe-haven demand amid slowing growth in China and Europe.

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