Rupee ended lower, Euro lower vs. Dollar

Monday,   24-Jan-2022   04:07 PM (IST)

The Indian rupee ended the session lower at 74.56/57 levels compared to its opening at 74.42/43 levels after touching the low of 74.6925/7025 levels tracking a sharp selloff in local equities amid speculations that a hawkish Federal Reserve will prompt foreign fund outflows. Rupee traded in the range of 74.42-74.6925 levels today. Meanwhile, crude oil prices extended last week’s advance with the benchmark Brent crude oil contract up 0.3% to $88.18 per barrel, as geopolitical tensions in Eastern Europe and the Middle East heightened concerns about an already tight supply outlook, Reuters reported. The contract is up 13.4% so far this month. Indian federal government bond yields rose for the second straight session as investors braced for U.S. central bank’s meeting this week amid expectations of a rates liftoff from March. India’s equity market selloff accelerated today. The Sensex, like most other regional equities, mirrored the sentiment on Wall Street. Panic selling due to the uncertainty around the quantum of a rate hike by the US Fed spooked the markets. Besides, geo-political tensions between Russia and Ukrain, rising dollar index, and surging oil prices and bond yield added to the woes. The frontline S&P BSE Sensex ended 1,546 points, or 2.6 per cent, lower at 57,491.5. The Nifty50 shut shop at 17,149, down 468 points or 2.7 per cent. In the forward segment 1mth, 3mth and 6mth annualized premia ended the day at 4.06%, 4.79% and 4.72% respectively.

The dollar inched higher on Monday, moving further off its recent two-month lows, lifted by the tension between Russia and the West over Ukraine and the possibility of a more hawkish stance from the Federal Reserve this week. Markets were until recently not fretting about the massing of Russian troops on Ukraine's borders, but tensions have tightened several notches of late, with U.S. President Joe Biden considering boosting military assets in Eastern Europe and ordering diplomats' families to leave Kyiv. Meanwhile, the IHS Markit Flash Composite Purchasing Managers' Index for the euro zone, a gauge of economic health, dropped in January to its lowest since last February. EUR/USD stays on the back foot at the start of the week and edges lower toward 1.1320. The data from the euro area showed that the business activity in the manufacturing sector continued to expand at a robust pace in early January. On a negative note, the Markit Services PMI declined to 51.2 from 53.1 in December. GBP/USD continues to edge lower and trades at its weakest level in more than two weeks near 1.3521. The data from the UK revealed that the private sector's business activity expanded at a softer pace in early January than it did in December.