Advertisement
Advertisement

USD/INR: Rupee Opens Higher, Gains 10 Paise In Early Trade

By:
Vivek Kumar
Published: Jul 15, 2021, 05:10 UTC

The Indian rupee opened higher, appreciating by over 8 paise against the U.S. dollar in early trade Thursday amid buying seen in the domestic equity market.

USD/INR

In this article:

The Indian rupee opened higher, appreciating by over 8 paise against the U.S. dollar in early trade Thursday amid buying seen in the domestic equity market.

The dollar to rupee conversion today fell to 74.4775 against the U.S. currency, down from Wednesday’s close of 74.5825. The rupee has lost over 170 paise in June – posting the biggest monthly drop since March 2020, the early days of the pandemic, and weakened over 15 paise so far in this month.

“The rupee continued to trade in a range and fell by 9 paise to close near 74.58 in the last session. The Dollar index fell marginally from its three-month high as comments on Wednesday from Fed chair Powell sent T-notes yield lower and undercut the dollar when he said the US economy has not yet achieved substantial further progress,” noted analysts at ICICI Direct.

“The USD to INR is lacking volatility and no major OI activity are observed, indicating it would trade in a range of 74.40-74.80 in the coming session. The dollar to rupee July contract on the NSE was at 74.66 in the last session. The open interest rose 0.4% for the July series.”

The dollar index, a measurement of the dollar’s value relative to six foreign currencies, was trading nearly flat at 92.410 – not far from its three-month high of 92.844.

The world’s dominant reserve currency, the USD, is expected to rise further over the coming year, largely driven by the Fed’s expectation of two rate hikes in 2023. A strengthening dollar and growing risk that the Federal Reserve would tighten its monetary policy earlier than expected would push the USD to INR pair higher.

“We updated our currency forecasts to reflect a neutral view on the USD this year and our expectation that it will strengthen next year. The timing of the change from neutral to bullish will depend on the COVID-19 situation and central bank tightening intentions,” noted analysts at UBS.

It is worth noting that sustained foreign fund outflows, higher oil prices and firm U.S. dollar will continue to weigh on the rupee.

Global oil benchmark Brent futures traded 0.74% lower at $74.20 per barrel at the time of writing. Last week, oil prices spiked to a three-year high of $77.84 per barrel as OPEC+ failed to reach an agreement. Higher oil prices would push up the inflation expectations and widen India’s trade deficit, which could hurt the Indian rupee.

The benchmark equity indices BSE Sensex was trading 124 points or 0.23% higher at 53,028, while the broader NSE Nifty advanced 32.85 points or 0.20% at 15,885.90. Foreign institutional investors were net sellers in the capital market on Wednesday as they offloaded shares worth Rs 1303.95 crore, as per exchange data.

About the Author

Vivek has over five years of experience in working for the financial market as a strategist and economist.

Did you find this article useful?

Advertisement