USD/INR Ruling Firm Backed by Rise in Oil Prices and Recovery in Local Stocks

  • by THO
  • 1 week ago
  • news
  • 1

opened the day a tad firmer at 74.5250 registering an overnight gain of 10.50 paise/USD influenced by the recovery in local stocks and rise in prices. The currency pair shall trade in the range between 74.40 to 74.80 till the end of this month.

The country’s forex reserves declined by USD 1.145 billion and USD 0.763 billion in two consecutive weeks ended 5-11-21 and 12-11-21 and the forex reserves stood at USD 640.112 billion as of 12-11-21 after registering a lifetime high of USD 642.453 billion in the week ended 3-9-21. The fall in forex reserves could be attributed to sell-side intervention by RBI to prevent the weakness in the domestic currency beyond the 75 levels.

Some of the analysts expressed the view that PM Narendra Modi’s announcement to repeal the three farm laws may raise concerns over the economic reforms by the Central Government. The repealing of farm laws is likely to weigh on the home currency, as FDI in agriculture and farm-related sectors will be impacted.

Cases across Europe have led to concerns over economic recovery and investors have moved toward the safe-haven dollar. Germany has not ruled out imposing a curb to limit the spreading of the virus and the Austrian Government announced that the country will go under lockdown to curb the recent spike in covid-19 cases. As a result, the euro fell against the dollar to a low of 1.1224 on 23-11-21. prices fell sharply on Monday amid concern over demand for the fuel in the near-term as a surge in covid-19 cases in Europe threatened to weigh on economic recovery. However, the brent crude prices are currently trading higher at USD 82.41/barrel as OPEC plus countries may not increase the output.

Strong US data is putting pressure on the Fed to rein in its ultra-low-rate policies in order to combat rising prices. Most of the analysts are projecting that Fed will likely start raising its benchmark interest rate from the second half of CY 2022, two quarters earlier than they had previously forecast.

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