Indian Rupee: Strength In Dollar Could Weigh

5 Apr 2022 , 09:04 AM

Strength in dollar and rebound in crude oil prices are expected to weigh down the Indian rupee in opening trades on Tuesday, 05 April 2022. The local unit closed the 2021-22 fiscal with overall losses of 3.61 per cent or 264 paise against the American currency due to a stronger dollar and surging crude oil prices.

On Monday, rupee started the financial year 2022-23 on a bullish note and settled 19 paise higher at 75.55 against the US dollar. At the interbank forex market, the local unit opened at 75.77 against the greenback and witnessed an intra-day high of 75.42 and a low of 75.79. It finally ended at 75.55, registering a rise of 19 paise over its previous close. On Thursday, the last trading session of FY22, the rupee had advanced by 16 paise to close at 75.74. The forex market was closed on Friday for the annual account closing of banks.

Domestic benchmark indices surged on Monday, supported by a rally in HDFC twins post merger announcement. The S&P BSE Sensex added 1,335.05 points or 2.25% at 60,611.74. The Nifty 50 index gained 382.95 points or 2.17% at 18,053.40. Foreign portfolio investors (FPIs) bought shares worth Rs 1,152.21 crore, while domestic institutional investors (DIIs), were net buyers to the tune of Rs 1,675.01 crore in the Indian equity market on 4 April, provisional data showed.

The Reserve Bank of India (RBI) Governor-headed rate setting panel will be holding its meeting from April 6-8. Inflation is picking up in India, but the countrys central bank is likely to maintain its loose policy even as its global peers raise rates, as per reports.

Overseas, Asian stocks are trading mixed on Tuesday as investors look ahead to the Reserve Bank of Australias latest rate decision. Markets in Hong Kong and mainland China are closed on Tuesday for a holiday. US stocks rose on Monday, boosted by megacap tech and growth stocks and a surge in Twitter after Elon Musk revealed his stake in the company, amid cautionary signals in the bond market and talk of more sanctions against Russia over Ukraine. Twitter shares surged more than 27% following news that Musk purchased a 9.2% passive stake in the company.

Meanwhile, the US dollar index rallied, approaching the 99 mark amid resurging demand for safe haven currency as Ukraine accused Russia of brutal killings of civilians. This will bring more sanctions on Russia from the Western leaders and a risk-off impulse in the market.

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