The Indian rupee is expected to see little movement against the dollar in opening trades on Wednesday awaiting cues from the local markets. Dollar eased back to its low levels after a marginal rebound overnight could also support the local currency. However, lingering concerns over rising coronavirus cases may continue to weigh.
On Tuesday, rupee slipped from the day’s highest level but managed to eke out a marginal gain of 3 paise at 72.46 against the US dollar. At the interbank forex market, the local currency opened at 72.36 against the US dollar and witnessed an intra-day high of 72.31 and a low of 72.46. It finally ended at 72.46 a dollar — registering a rise of 3 paise from its previous close.
The domestic benchmark BSE Sensex ended almost flat, while the 50-unit Nifty ended with minor gains after a volatile session on Tuesday. The barometer index, the S&P BSE Sensex, rose 7.09 points or 0.01 per cent to 49,751.41. The Nifty 50 index added 32.10 points or 0.22 per cent to 14,707.80.
Foreign portfolio investors (FPIs) sold shares worth Rs 1,569.04 crore, while domestic institutional investors (DIIs), were net buyers to the tune of Rs 216.67 crore in the Indian equity market on February 23, provisional data showed.
Overseas, Asian stocks are trading mixed on Wednesday as investors turned cautious, despite remarks overnight from Federal Reserve Chair Jerome Powell that attempted to ease some worries around higher interest rates and inflation. Wall Street reversed course late Tuesday, with the S&P 500 and the Dow whipsawing to positive territory by the closing bell in a tug-of-war between stocks that thrived amid lockdowns and those that stand to benefit most from a reopening economy, IIFL Securities said in a note.
Powell said in his testimony to US Congress that the American economy is a long way from its employment and inflation goals and that it will likely take time for substantial further progress to be achieved. He added that inflation is still and that the Fed is committed to current policy.
Meanwhile, the US Dollar Index that tracks the greenback against a basket of other currencies edged down 0.10 per cent to 90.032. The dollar was down on Wednesday morning in Asia, sliding to a three-year low against the GBP and recording losses against commodities currencies, as increased bets that the global economic recovery from Covid-19 whet investors risk appetite.
The domestic currency is likely to strengthen 1.3 per cent and average 73.5 against the US dollar in the financial year 2022-23 compared with an average level of 74.4 in the financial year 2021-22.