Indian Rupee: Rebound In Oil Prices Could Restrict Appreciation Bias

21 Jun 2022 , 09:00 AM

Persistent weakness in the US dollar ahead of the Fed testimony due on Wednesday is likely to keep the Indian rupee supported. The dollar index, that measures the greenback against a basket of currencies is lingering near 104 levels. However, recovery in crude oil and sustained foreign fund outflows could restrict appreciation bias in the local unit. On Monday, rupee appreciated by 7 paise to settle at 77.98 against the US dollar. At the interbank forex market, the local unit opened strong at 77.98 against the greenback and witnessed an intra-day high of 77.87 and a low of 78.03. It finally settled at 77.98, a rise of 7 paise over its previous close of 78.05. Key equity indices closed with decent gains on Monday, breaching six-day losing streak. The barometer index, the S&P BSE Sensex, rose 237.42 points or 0.46% to 51,597.84. The Nifty 50 index rose 56.65 points or 0.37% to 15,350.15. Foreign portfolio investors (FPIs) sold shares worth Rs 1,217.12 crore, while domestic institutional investors (DIIs), were net buyers to the tune of Rs 2,093.39 crore in the Indian equity market on 20 June, provisional data showed. Overseas, Asian stocks are mostly trading higher on Tuesday following a positive lead from Europe as some stability returned to markets after last weeks hefty losses. Meanwhile, Australias central bank says inflation will peak by the end of the year. The Reserve Bank of Australia governor Philip Lowe said in a speech that he expected inflation in Australia to peak at around 7% by the end of the year as pandemic-related supply chain disruptions resolve. South Koreas central bank on Tuesday said it expects inflation will be higher than earlier projected and that it would closely assess debt repayment burdens to determine whether a half-percentage point interest rate hike in July was appropriate. Markets in the U.S. were closed on Monday for a holiday. Investors will monitor incoming data, including existing home sales on Tuesday, to gauge the health of the economy. Fed Chair Jerome Powell will testify before Congress Wednesday and Thursday. His appearance comes after a recent rate hike by three-quarters of a percentage point, the central banks biggest increase since 1994. Powered by Commodity Insights