Indian Rupee: Risk Aversion Amid Global Concerns To Weigh

14 Feb 2022 , 09:11 AM

The Indian rupee is expected to be under pressure in opening trades on Monday, 14 February 2022 amid mounting tension between Russia and Ukraine. Besides, surging crude oil prices and dollar surge in unlikely to provide support to the local currency. Moreover, domestic industrial output slumped to a 10-month low of 0.4% in December, dragged down by manufacturing, capital goods and consumer durables output along with an unfavourable base, unsupportive for rupee. The IIP had registered a growth of 1.3% a month ago and 2.2% in December 2020.

On Friday, rupee plunged by 24 paise to close at 75.39 against the US currency. At the interbank foreign exchange market, the rupee opened at 75.40 against the American dollar, and later witnessed an intra-day high of 75.27 and a low of 75.46 against the greenback. The local unit finally ended the day at 75.39, down 24 paise from the previous close. On Thursday, the rupee had settled at 75.15 against the US dollar, after the Reserve Bank of India kept the benchmark lending rate unchanged and said it will continue with the accommodative stance.

Domestic equity barometers ended with steep cuts after a weak session on Friday. The barometer index, the S&P BSE Sensex, was down 773.11 points or 1.31% to 58,152.92. The Nifty 50 index fell 231.10 points or 1.31% to 17,374.75. Foreign portfolio investors (FPIs) bought shares worth Rs 108.53 crore, while domestic institutional investors (DIIs), were net sellers to the tune of Rs 696.90 crore in the Indian equity market on 11 February, provisional data showed.

Overseas, Asian stocks are trading lower on Monday on tensions between Russia and Ukraine. Some airlines have reportedly canceled or diverted flights to Ukraine amid heightened fears that an invasion by Russia is imminent despite intensive weekend talks between the Kremlin and the West. US stocks slid on Friday as increased tensions between Ukraine and Russia led investors to dump risky assets like equities.

Meanwhile, the dollar and safe-haven currencies held gains and riskier ones struggled for traction on Monday. The dollar index climbed to 96.08 early in the Asia session.

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