The rupee continued its upward trend on Friday, albeit only slightly, as stable oil costs have allayed concerns about aggressive rate hikes by the Federal Reserve after data showed the fastest rise in US inflation in four decades.
Reuters news agency last quoted the rupee at 76.28, a gain of about 0.2 percent from Thursday’s closing price of 76.43, after opening at 76.43.
As PTI said, the rupee rose more than 0.2 percent to 76.27 against the US dollar in opening trading on Friday, supported by positive domestic stocks and a slump in crude oil prices.
On interbank currencies, the rupee opened at $76.34 against the US dollar, then gained momentum and hit 76.27, a gain of 16 paise from the previous close. On Thursday, the rupee had appreciated 19 paise to close at 76.43 per dollar, PTI added.
“Geopolitical risks have shifted, commodities have cooled and emerging market currencies and equities have advanced,” said Kshitij Purohit, International and Commodities Lead at CapitalVia Global Research.
The BJP returned to power in Uttar Pradesh on Thursday, also holding Uttarakhand, Manipur and Goa, while Arvind Kejriwal’s AAP wrote a stunning victory in Punjab, with a three-quarter majority.
According to market experts, the outcome of these state elections will ensure policy continuity and stability, which is important for the market.
“The market texture points to a strong possibility of range-bound activity in the near future…so buy and sell downward on rallies,” Shrikant Chouhan, chief of retail equity research at Kotak Securities, told Reuters.
The market was helped by the expectation of a drop in oil prices and a majority vote in the government’s state elections, which provide stability for investment in emerging markets such as India, Mr Chouhan added.
Still, global inventories fell and trade in domestic exchanges fell after opening in the green, driven by risks from the Russia-Ukraine conflict as talks between their foreign ministers on Thursday brought little respite.
The US and its allies are stepping up pressure on Mosocw over the invasion of Ukraine as they are expected to revoke Russia’s “most favored nation” status on Friday over its invasion of Ukraine, several people familiar with the Ukraine invasion said. situation to Reuters.
Sentiment is also likely to deteriorate as US inflation has hit its biggest rise in 40 years, indicating that the Fed could act “more aggressively” to rein in inflation.
“We have a terrible macro background (with) a serious inflation problem, which means we’re going to see a much, much tighter monetary policy,” Rob Carnell, chief economist at ING told Reuters. Russia’s war on Ukraine would likely make everything from energy and metals to agricultural goods a lot more expensive, he added.
Everyone’s income is declining. Global growth will be battered. What else do you need? “At some point you will probably pull back much more sharply, but at the moment there is still a bit of denial in the markets,” said ING’s Mr. carnell.