The rupee strengthened its touchdown to 76.33 early on Tuesday, following the second consecutive session of falling oil prices. However, inflation at the high end of the 2-6 per cent target range of the Reserve Bank of India and the widening of the trade deficit should limit sentiment.
All that is likely to be weighted is a sustained capital outflow and volatile domestic equities, with Sensex and Nifty in the red on Tuesday.
The inflation and trade figures released before the escalation of the war in Russia and Ukraine were staggering and he does not believe that the rise in the price of crude oil is more than $ 100 a barrel, where it remains.
In the interbank exchange, the rupee opened strong at 76.40 against the US dollar and gained further momentum to trade at 76.33, registering a 21-country rise in the last close, the PTI said. On Monday, the rupee settled at 76.54 against the greenback.
The dollar index, which measures the strength of the greenback in front of a six-currency basket, fell 0.13 percent to 98.89. But the dollar may dominate as the Federal Reserve prepares to raise interest rates as it gathers this week as analysts see signs of the FOMC tracking the rate hike, including the pace and size of future hikes.
“We suggest you stay out of today’s session before the FOMC meeting,” said Rahul Kalantri Mehta, vice president of Commodities for Equities.
International crude oil prices have fallen sharply as negotiations between Russia and Ukraine, which are set to resume on Tuesday, will resolve the crisis. The fourth round of talks began on Monday, but was not decisive without much progress.
Brent crude oil futures Crude extended its decline for a second day, falling to a two-week low on Tuesday.