Foreign institutional investors withdrew around $3.5 billion from stock markets in January alone. Meanwhile, Asian currencies and stocks were buoyed by Fed Chair Jerome Powell acknowledging that U.S. inflation had started to cool after the central bank raised rates by an expected 25 basis points. However, he did signal that interest rates would rise further and that cuts were not in the offing, but markets continued to cheer the likelihood of the Fed rate peaking soon, with the dollar index plunging more than 1% overnight. (Reporting by Anushka Trivedi; Editing by Janane Venkatraman)
anushka.trivedi.thomsonreuters.com@reuters.net)) By Anushka Trivedi
MUMBAI, Feb 2 (Reuters) - The Indian rupee edged higher
on Thursday, as risk assets jumped after the U.S. Federal
Reserve meeting, but gains in the local currency were capped as
equities remained jittery.
The rupee was at 81.7625 per U.S. dollar by 10:27
a.m. IST, compared to its previous close of 81.92.
The rupee came under pressure this week, as it weakened past
the 82-per-dollar levels in the past two sessions. It didn't
even manage to sustain post-budget gains on Wednesday, mirroring
the volatility in equities owing to an Adani-led selloff.
In local markets on Thursday, a decline in Adani Group
shares after the conglomerate shelved a $2.5 billion secondary
share sale dominated the mood yet again. Indian equities were tepid and traders cited worries about more foreign investor
outflows.
On the view front, outflows by foreign institutional
investors are a negative for the rupee, whereas the weakness in
the dollar to a multi-month low is a positive, said Amit Pabari,
managing director at CR Forex.
"Broadly, the pair can be seen trading in a wide range of
81.50 to 81.90. Either side breakout will result in a 20-40
paisa move."
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