Indian Rupee: To Stay Under Pressure

24 Mar 2022 , 09:10 AM

Concerns regarding higher crude oil prices is expected to extend pressure on the Indian rupee on Thursday, 24 March 2022. Crude oil prices crossed $114 per barrel amid fears of prolonged supply disruptions. Oil prices impact Indias current account deficit and trade balance significantly as India imports more than 80% of its oil needs. Besides, dollar recovers after a sharp fall overnight to further weigh down the local currency.

On Wednesday, rupee pared initial gains to settle 14 paise lower at 76.32 against the US dollar. At the interbank foreign exchange market, the rupee opened strong at 76.08 against the American currency but could not hold the momentum and entered negative territory during the session. The domestic unit finally settled at 76.32 against the greenback, down 14 paise from the previous close. On Tuesday, the rupee had settled flat at 76.18 against the American currency.

Domestic key equity barometers ended with modest losses on Wednesday. The barometer index, the S&P BSE Sensex, was down 304.48 points or 0.53% to 57,684.82. The Nifty 50 index fell 69.85 points or 0.40% to 17,245.65. Foreign portfolio investors (FPIs) bought shares worth Rs 481.33 crore, while domestic institutional investors (DIIs), were net sellers to the tune of Rs 294.23 crore in the Indian equity market on 23 March, provisional data showed.

Overseas, Asian stocks are trading lower on Thursday, as the recent global equities rally eased. Volatile commodity prices added concerns to a market already dealing with record inflation and the impact of an ongoing war in Ukraine.

US stocks eased Wednesday as oil prices rose, renewing inflation fears. Traders digested the latest news on the Ukraine-Russia war. Ukrainian President Volodymyr Zelenskyy called for more pressure on Russia from other countries as the conflict appears to be entering a stalemate. Oil prices ticked higher on the day, with U.S. benchmark WTI crude gaining around 5% to nearly $115 per barrel. International oil benchmark Brent crude advanced more than 5% to top $121 per barrel.

Meanwhile, the US dollar index, that measures the greenback against a basket of currencies was last seen quoting at 98.76. The dollar found some support in Asia on Thursday as commodity currencies took a breather from a steep rally driven by rising prices for exports.

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