The drop in crude oil and commodity prices and anticipation of foreign capital inflows from LIC’s IPO supported the rupee, the expert says
The drop in crude oil and commodity prices and anticipation of foreign capital inflows from LIC’s IPO supported the rupee, the expert says
After a two-day losing streak, the rupee rose 4 paise against the US dollar to 76.60 on Tuesday after regional currencies and domestic stocks rallied.
However, the appreciation bias in the local unit will be limited in the short-term amid fears over the economic impact of China’s COVID-19 lockdowns and an aggressive pace of US interest rate hikes, traders said.
In the interbank FX market, the rupee opened at 76.48 against the greenback and has ranged from 76.43 to 76.69 in intraday trading. The rupee was trading at 76.60 at 3:30pm, up 4 paise from the previous close of 76.64.
“The Indian rupee rose after two days of sharp sell-off following a rebound in regional currencies and domestic stocks. The decline in crude oil and commodity prices and expectations of foreign capital inflows from LIC’s IPO supported the rupee,” said Dilip Parmar, Research Analyst , HDFC Securities.
However, the local entity is not out of the woods just yet as the dollar’s strength against major currencies, weaker economic growth and higher inflation are likely to limit gains.
“Broadly speaking, spot USDINR is expected to trade in the 76-77 range, while short-term directions will be followed by risk sentiment and moves in the Chinese yuan,” said Mr. Parmar.
On the domestic stock market front, the BSE Sensex closed up 776.72 points, or 1.37%, to 57,356.61, while the broader NSE Nifty was up 246.85 points, or 1.46%, to 17,200.80.
Brent crude futures, the global oil benchmark, fell 0.49% to $101.82 a barrel.
The dollar index, which measures the dollar’s strength against a basket of six currencies, rose 0.06% to 101.81.
Foreign institutional investors were net sellers in the capital market on Monday, selling ₹3,302.85 crore of shares, according to stock market data.
