Indian Rupee: Strong Opening On Cards

17 Mar 2022 , 08:56 AM

The Indian rupee is expected to extend gains against the dollar in opening trades on Thursday, 17 March 2022 taking cues from weak dollar after a federal rate hike to combat starkly high inflation. Besides, easing crude oil prices on hopes of progress in Russia-Ukraine peace talks and upbeat global sentiments are likely to augur well for the domestic unit.

On Wednesday, rupee spurted by 42 paise to a nearly two-week high of 76.20 against the US dollar. At the interbank forex market, the local unit opened at 76.40 against the greenback and witnessed an intra-day high of 76.19 and a low of 76.44. The rupee quoted at 76.20, registering a rise of 42 paise over its previous close of 76.62.

Domestic equity market rallied on Wednesday, tracking positive global stocks. The barometer index, the S&P BSE Sensex, surged 1,039.80 points or 1.86% at 56,816.65. The Nifty 50 index gained 312.35 points or 1.87% at 16,975.35. Foreign portfolio investors (FPIs) bought shares worth Rs 311.99 crore, while domestic institutional investors (DIIs), were net buyers to the tune of Rs 772.55 crore in the Indian equity market on 16 March, provisional data showed.

Overseas, Asian stocks are trading higher on Thursday following overnight gains on Wall Street, while the US Federal Reserve announced its first rate hike in more than three years. US stocks rallied in a wild session after the Federal Reserve raised rates and said it would hike another six times this year. The Fed announced at the conclusion of its two-day meeting Wednesday that it will increase short-term interest rates by a quarter of a percentage point, a well-telegraphed move by the central bank as it seeks to control surging inflation. The Fed forecast a consensus funds rate of 1.9% by years end, which would mean a hike at each of the remaining central bank meetings this year.

Fed Chair Jerome Powell, speaking after the end of the latest two-day policy meeting, said the economy is strong enough to weather the rate hikes and maintain its current strong hiring and wage growth, and that the Fed needed to now focus on limiting the impact of price increases on American families.

Meanwhile, the International Court of Justice (ICJ) ordered Russia on Wednesday to stop the military actions it started in Ukraine on February 24. The Russian Federation shall immediately suspend the military operations that it commenced on February 24 in the territory of Ukraine, the court said. The judges added Russia must also ensure that other forces under its control or supported by Moscow should not continue the military operation. Crude oil lost ground for the fifth time in the last six days on Wednesday as traders reacted to hoped-for progress in Russia-Ukraine peace talks and a surprising increase in US inventories. Meanwhile, the U.S. dollar index fell 0.5% overnight and edged a further 0.2% lower to 98.287 in early Asia trade.

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