The Indian rupee could continue to stay on the defensive in opening trades on Tuesday, 07 December 2021 as any hopes of recovery amid overnight fall in dollar was dampened by rising US treasury yields. Besides, rising crude prices in international markets could keep a check on rupee gains. However, local equities likely to rebound after massive erosion seen in previous sentiments could lend some support to the domestic unit.
On Monday, rupee plunged 30 paise to settle at 75.42 against the US dollar. At the interbank foreign exchange market, the local currency opened weak at 75.22 and witnessed an intra-day high of 75.19 and a low of 75.45 against the US dollar in the day trade. The local unit finally settled at 75.42 a dollar, down 30 paise over its previous close. On Friday, the rupee had settled at 75.12 against the US dollar.
The Reserve Bank of India (RBI)'s Monetary Policy Committee (MPC) meet began on 6 December and concludes on 8 December 2021. MPC's interest rate decision will be disclosed on Wednesday, 8 December 2021. In the previous meeting, MPC kept the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 4%.
Domestic benchmark stock market indices fell sharply on Monday amid uncertainty around the new coronavirus variant and due to pressure from foreign institutional investors selling. The barometer index, the S&P BSE Sensex, tumbled 949.32 points or 1.65% to 56,747.14. The Nifty 50 index lost 284.45 points or 1.65% to 16,912.25. Foreign portfolio investors (FPIs) sold shares worth Rs 3,361.28 crore, while domestic institutional investors (DIIs), were net buyers to the tune of Rs 1,701.56 crore in the Indian equity market on 6 December, provisional data showed.
Overseas, Asian stocks are trading higher on Tuesday, bouncing back from Monday losses as Wall Street rallied on optimism that the omicron variant risk might not be as bad as feared. US stocks rallied on Monday as investors shook off fears around the emerging threat of the Covid omicron variant. White House Chief Medical Advisor Dr. Anthony Fauci had reportedly said that the initial data on the omicron variant was “encouraging,” though he cautioned that more information was needed to fully understand it.
Meanwhile, the U.S. Dollar Currency Index, which measures the greenback against six rivals, was at 96.23, not far from the 16-month high of 96.938 touched late last month.
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