MUMBAI: Tuesday’s opening of the Indian rupee against the US dollar was anticipated to be little altered despite a decline in Asian markets and US equity futures brought on by concerns about the outlook for world economic growth.
The Indian rupee was trading at roughly 82.72 to 82.75 against the dollar in the early going, down from 82.7375 the previous day.
Due to importer hedging and possible Reserve Bank of India intervention, the local currency has traded in a constrained 82.40–83 range for the past three weeks. “This small range is expected to cause high volatility in the upcoming days, according to some analysts.”
“Vikas Bajaj, head of currency options at Kotak Securities, says that the primary concern is that the longer the rupee trades in a tight range, the more risk keeps getting built in for a breakout.”
“Which way, upside or downside, is the million dollar question.” The majority of Asian markets fell, and futures pointed to a sluggish start for US equities in the new year.
The onshore Chinese yuan and the Korean won both fell by roughly 0.3%, while Australian and South Korean equities both fell by 1.3%.
Concerns over China’s near-term economic prospects influenced the market for risk assets. A surge of coronavirus infections that broke out after the removal of the zero-COVID policy also influenced the market. Worrying about the effects of the Federal Reserve’s rate hikes also had an impact on the market.
“Experts anticipate more volatility for the Indian rupee later in January after it opened flat.”
According to a private sector survey released on Tuesday, China’s factory activity decreased at a faster rate in December. This decrease was due to a rise in diseases that disrupted productivity.
Over the weekend, the International Monetary Fund issued a warning. This warning stated that the simultaneous slowdowns in the United States, Europe, and China would make the current year difficult for the world economy.
The Fed expects rates to continue high in the current year. This expectation is based on the minutes from its December meeting. These minutes are coming later this week.
“The dollar index remained unchanged at 103.800.”
Investors will be watching the US manufacturing and services statistics. They will also be watching the important monthly jobs report. In addition to these, they will be watching the Fed minutes.