Indian Rupee: Supported By Prolonged Dollar Weakness

26 Jul 2022 , 09:19 AM

The Indian rupee is seeing sustained recovery in early trades on Tuesday, tracking weakness in the US dollar overseas. Prolonged dollar weakness amid downbeat treasury yields on increasing fears of a recession is seen benefitting rupee. US 10-year Treasury yields are down 3.5 basis points near 2.78% while the dollar index, that measures the greenback against a basket of currencies is lower by 0.17% at 106.17. On Monday, rupee appreciated 14 paise to close at 79.78 against the US dollar. During the session, the local unit witnessed an intra-day high of 79.70 and a low of 79.87 against the American currency. In the previous session, the rupee had closed at 79.90 against the American currency. Key equity indices ended with modest losses on Monday, snapping a six-day rising streak. The barometer index, the S&P BSE Sensex, declined 306.01 points or 0.55% to 55,766.22. The Nifty 50 index lost 88.45 points or 0.53% to 16,631. Foreign portfolio investors (FPIs) sold shares worth Rs 844.78 crore, while domestic institutional investors (DIIs), were net sellers to the tune of Rs 72.26 crore in the Indian equity market on 25 July, provisional data showed. Overseas, Asian stocks are mostly trading higher on Tuesday as South Koreas gross domestic product beat estimates. South Koreas economy grew 0.7% in the second quarter compared with the first quarter of 2022, according to estimates released by the Bank of Korea. The countrys GDP grew 0.6% in the January to March quarter. The Bank of Japan released the minutes for it June meeting on Tuesday, after keeping its interest rates at ultra-low levels last week. Members of the BOJ policy board said the economy was on its way to recovery from the effects of Covid, but still needs strong support on the financial side due to pressure from the rise in commodity prices. They also agreed that it was necessary to pay due attention to developments in financial and foreign exchange markets and their impact on Japans economic activity and prices, the minutes said. Wall Street stock markets delivered a mixed performance on Monday as cautious investors looked ahead to a week of Big Tech earnings and a crucial interest rate decision from the US Federal Reserve. At the end of its two-day monetary policy meeting on Wednesday, the Fed is widely expected to raise its main interest rate by 0.75 percentage points. Powered by Commodity Insights