Indian Rupee: Rising Crude Prices To Weigh

23 Mar 2022 , 08:53 AM

Rising international crude oil prices are likely to further weigh down the Indian rupee on Wednesday, 23 March 2022. However, foreign fund inflows and dollar weakness overseas could lend some much-needed support to the local unit.

On Tuesday, rupee pared its initial losses to settle flat at 76.18 against the American currency. At the interbank foreign exchange, the rupee opened sharply lower at 76.39 against the US dollar. However, it recovered all its losses to closed at 76.18. During the day, the local unit witnessed heavy volatility amid concerns over global oil supplies and saw an intra-day high of 76.10 and a low of 76.48. On Monday, the rupee slumped 34 paise to close at 76.18 against the US dollar.

Domestic equity barometers settled with robust gains on Tuesday. The S&P BSE Sensex surged 696.81 points or 1.22% at 57,989.30. The Nifty 50 index rallied 197.90 points or 1.16% to 17,315.50. Foreign portfolio investors (FPIs) bought shares worth Rs 384.48 crore, while domestic institutional investors (DIIs), were net sellers to the tune of Rs 602.05 crore in the Indian equity market on 22 March, provisional data showed.

Overseas, Asian stocks are trading higher on Wednesday as investors monitored oil prices and continued to assess the outlook for U.S. Federal Reserve monetary policy. U.S. stocks rebounded Tuesday as traders digested Federal Reserve Chair Jerome Powells latest rate hike comments. Powell said ?inflation is much too high? and vowed to take ?necessary steps? to curb inflation.

Meanwhile, the dollar index, that measures the greenback against a basket of currencies was last seen quoting at 98.44. The dollar edged lower as a boost from comments by U.S. Federal Reserve Chair Jerome Powell that boosted the greenback on the previous day faded and a rise in equities markets help boost risk-on sentiment. The greenback saw its biggest one-day percentage gain since March 10 on Monday, as Powell opened the door for raising interest rates by more than 25 basis points at upcoming policy meetings in order to combat inflation.

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