The Indian rupee slipped against the U.S. dollar for the second straight day on Tuesday as the domestic unit weighed down by greenback strength and high oil prices.

The USD/INR rose to an intraday high of 74.408 against the U.S. currency – the highest since April 28 – up from Monday’s close of 74.13. The rupee has lost over 184 paise so far this month and weakened about 26 paise in the last two trading sessions.

“Indian Rupee may (trade) lower against the dollar as the greenback hovers around multi-month highs against other major currencies as Fed official Bullard added to expectations that US interest rates could rise sooner rather than later; although any sharp appreciation in the Rupee may be limited by persistent RBI intervention,” noted analyst at ICICI Bank.

The dollar index, a measurement of the dollar’s value relative to six foreign currencies, rose 0.06% to 91.958. The dollar is expected to rise further over the coming year, largely driven by the Fed’s dot plot released last week, which suggested an expectation of two rate hikes in 2023.

“US dollar remains firm amid rate hike concerns as the market was still pricing in the hawkish surprise from the US Federal Reserve. Investor focus will turn to Powell’s testimony for fresh guidance on the road ahead as far as US monetary policy is concerned,” ICICI Bank’s analyst added.

The Fed will remain in focus today as Federal Reserve Chairman Jerome Powell will testify on lessons learned from the central bank’s response to the COVID-19 pandemic. Investors will wait and watch if he confirms the hawkish guidance or takes a U-turn on faster tightening.

The Indian equity market witnessed a strong influx of retail investors, pushing the benchmark equity indices ended 14.25 points or 0.03% higher at 52,588.71, while the broader NSE Nifty advanced 26.25 points or 0.17% to 15,772.75.

However, foreign institutional investors were net sellers in the capital market on Monday as they sold shares worth Rs 1,244.71 crore, as per provisional data. Global oil benchmark Brent futures fell 0.24% to $74.72 per barrel.

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This article was originally posted on FX Empire


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