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The rupee was stable against US dollar today despite the greenback surging against other major currencies. The rupee was trading at 76.29 vs USD after trading in the range of 76.29 and 76.40 in the session so far. On Monday, The rupee depreciated for the third straight session to close 10 paise lower at 76.29 against the US dollar.

Foreign institutional investors were net sellers in the capital market on Monday, as they offloaded shares worth 6,387.45 crore, as per stock exchange data.

The dollar index today rose past 101 for the first time since March 2020, as the greenback set its latest 20-year high on the yen and tested a two-year peak on the euro, supported by high U.S. Treasury yields and expectations of good economic data. European currencies weren't helped by the latest fighting in Ukraine, which said Russia had started an anticipated new offensive in the east of the country.

The dollar index, which measures the greenback against six peers, was last at 100.99, up 0.2%, having risen as high as 101.02 in early trade. It has gained 2.6% so far this month.

“Dollar index in the last few sessions has been inching higher on back of prospects that the Federal Reserve could adopt to a more aggressive rate hike process than estimated earlier. The Fed has already begun raising rates this year and rising inflation is one if the factors that is supporting the view for more rate hikes. Fed minutes released earlier suggest that officials at the central bank have also started to discuss about balance sheet trimming, another tool to manage its fight against inflation. Going ahead, hawkish stance by the Federal Reserve is likely to extend gains for the greenback. We expect the dollar index to test levels of 103.20 in the near future and downside could be restricted to levels of 97.20," said Gaurang Somaiya, Forex & Bullion Analyst at Motilal Oswal Financial Services.

Brent crude today edged lower but still remained at $112.20 a barrel. Many analysts expect emerging markets currencies including rupee to remain under pressure.

“Despite odds of weaker fundamentals like US DXY near 101, US 10-year yield near 2.85%, Crude oil above $113, natural gas at 2008 high, FII’s withdrawal of more than Rs. 17,000 Crore over last 6 sessions, domestic equities at 3-week low - the USD-INR pair is still resisting under 76.40-50 levels. The reasons could be borrowing flows or RBI's usage of dollar reserves," CR Forex Advisors said in a note.

“On the news front, geopolitical tension is further deepening as Russia claims hundreds of strikes as it prepares for the offensive in east Ukraine. The risk-off could further support broader demand for the USD and could weaker riskier EM FX."

 

 

 

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