The Indian rupee opened on a weaker note against the US dollar in early morning trade Monday as high oil prices and firm greenback continued to put pressure on the battered Asian currency.
The dollar to rupee conversion today rose to 74.255 against the U.S. currency, up from Friday’s close of 74.20. The rupee has lost over 160 paise so far this month and weakened about 35 paise last week.
“The USD to INR continued to trade above 74 levels supported by a recent dollar index upside and rising crude oil prices. As long as the dollar trades above 91.20 level and oil prices remain elevated that may keep the rupee under pressures. The US$INR pair should move towards 74.6 levels in coming days,” noted analysts at ICICI Direct.
“The dollar-rupee June contract on the NSE was at 74.31 in the last session. The open interest fell 7.1% for the June series.”
The dollar index, a measurement of the dollar’s value relative to six foreign currencies, was trading 0.01% higher at 91.859. The dollar is expected to rise over the coming year, largely driven by the Fed’s dot plot released last week, which suggested an expectation of two rate hikes in 2023.
“The US dollar is expected to trade with negative bias amid Fed Officials differing view on how long inflation is likely to stay high and when to tighten monetary policy. Further, softer than expected economic data from US will continue to hurt Dollar. Additionally, traders will remain cautious ahead of FOMC official’s statement on inflation and interest rates. Moreover, market sentiments may improve as US President Joe Biden and a group of senators agreed roughly $1 trillion infrastructure plan securing bipartisan deal,” noted analysts at Sharekhan by BNP Paribas.
“However, sharp downside may be cushioned on divergence in global monetary policies and rise in geopolitical tensions. U.S conducted airstrikes in Syria and Iraq against two Iranian backed militias that were mounting drone attacks against U.S troops. Furthermore, rapid vaccination program will lead to economic reopening. 153.02 million People or 46.1% of US population have been fully vaccinated and 179.2 million people or 54% of population have received at least 1 dose.”
The yellow metal prices increased as the dollar weakened marginally and lower-than-forecast U.S. inflation data diminished fears of an early monetary policy tightening by the U.S. Federal Reserve.
The benchmark equity indices the BSE Sensex was down 13.10 points or 0.02% at 52911.94, and the Nifty was up 1.50 points or 0.01% at 15861.90.
However, foreign institutional investors were net sellers in the capital market on Friday as they offloaded shares worth Rs 678.84 crore, as per exchange data. Global oil benchmark Brent futures fell 0.14% to $76.07 per barrel.
This article was originally posted on FX Empire
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