Indian rupee finishes nearly flat against dollar

Published On: January 31, 2022Categories: Latest News1.4 min read

Forex traders said geopolitical tensions, elevated crude oil prices and hawkish US Fed stance also weighed on the local currency

The rupee snapped its three-day losing streak to finish 2 paise higher at 75.07 against the U.S. dollar on Friday amid expectation of better dollar inflows from upcoming IPOs.

However, the rebound in the rupee was restricted amid weakness in domestic equities, analysts said.

Forex traders said geopolitical tensions, elevated crude oil prices and hawkish US Fed stance also weighed on the local currency.

At the interbank foreign exchange market, the rupee opened at 75.12 a dollar and witnessed an intra-day high of 74.88 and a low of 75.13.

The domestic currency finally settled at 75.07 against the American currency, up 2 paise over its last close of 75.09.

Meanwhile, the U.S. dollar index gained 0.11% to 97.35.

The Indian rupee managed to stabilise after sharp sell-off in the last three days and retraced from one-month low on expectation of better dollar inflows from upcoming IPOs and position downsizing ahead of the Union Budget, said Dilip Parmar, Research Analyst, HDFC Securities.

However, stronger dollar index, elevated energy price and higher bond yields could push local currency lower in the coming days, Parmar added.

During this week, the local currency has depreciated by 64 paise against the U.S. dollar.

Brent crude futures, the global oil benchmark, gained 0.49% to $89.78 per barrel.

According to Sugandha Sachdeva, Vice President – Commodity and Currency Research, Religare Broking, the US Fed was slightly tilted on the hawkish side and markets were spooked on prospects of more-than-expected interest rate increases that boosted the dollar index.

A strong dollar, geopolitical tensions between Russia-Ukraine, the relentless rise in crude oil prices are going to be headwinds for the rupee over the long-term. However, in the near-term, we do see an appreciation bias setting in for the rupee, Sachdeva said.

About the Author: Jonathan Adams

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