Indian Rupee: Under Severe Pressure

13 Jun 2022 , 08:58 AM

The Indian rupee is coming under severe pressure from broad dollar strength, elevated crude oil prices and massive sell-off of foreign fund from Indian equities. The currency that is already lingering at all-time low levels is expected to witness further weakness in opening trades on Monday, 13 June 2022. The dollar index, which tracks the greenback against six peers was 0.3% higher at 104.52, its highest in four weeks, after data showed U.S. consumer prices accelerated in May, strengthening expectations the Federal Reserve may have to continue with interest rate hikes through September to combat inflation. In the 12 months through May, the CPI increased 8.6% after rising 8.3% in April. On Friday, rupee hit yet another record low of 77.93 against the US dollar. At the interbank foreign exchange market, the local currency opened at 77.81 and witnessed an intra-day high of 77.79 and a low of 77.93 against the US dollar. The local unit finally settled at its all-time low of 77.93, down 19 paise over its previous close of 77.74. Domestic equity benchmarks slumped on Friday, resuming its losing run after a days gap. The S&P BSE Sensex, was tumbled 1,016.84 points or 1.84% to 54,303.44. The Nifty 50 index fell 276.30 points or 1.68% to 16,201.80. Foreign portfolio investors (FPIs) sold shares worth Rs 3,973.95 crore, while domestic institutional investors (DIIs), were net buyers to the tune of Rs 2,831.07 crore in the Indian equity market on 10 June, provisional data showed. Industrial activity in April jumped 7.1% year on year, according to the index of industrial production (IIP) data released by the government on Friday. In comparison, industrial growth had expanded 1.9% in March. Growth in the mining sector was 7.8% in April 2022. The manufacturing sector expanded by 6.3%. Power sector showed a growth of 11.8% year on year in April 2022. Overseas, Asian stocks tumbled on Monday as red-hot U.S. inflation reignited worries about even more aggressive Federal Reserve policy tightening, and a COVID-19 warning from Beijing added to concerns about global growth. Markets in Australia are closed on Monday for a holiday. US stocks ended sharply lower on Friday as a steeper-than-expected rise in US consumer prices in May fuelled fears of more aggressive interest rate hikes by the Federal Reserve. Meanwhile, the U.S. consumer price index increased a bigger-than-expected 8.6% last month, the largest year-on-year increase since December 1981, Labor Department figures showed Friday. Powered by Commodity Insights