INR caught a bid against the USD amid improved risk sentiment withstanding the negative effect of the Union budget. At the interbank market, the value of Rupee appreciated by 31 paise settling up 0.43% at 71.31 against the US dollar. However, the USD/INR exchange rate was seen trading on Monday within a trading range of 71.74 and 71.30.
The Union budget for the current fiscal year will continue to weigh in on the INR exchange rate. Despite the INR performance against the greenback following the budget release the markets will remain cautious.
The newly announced fiscal measured amid to boost the economy are also going to widen the fiscal deficit as the budget spending is expected to increase by 13%.
Elsewhere, fears over the coronavirus outbreak have moderately faded after China pledged to intensify its action to reduce the spread of the new epidemic. In the short-term, the virus-related uncertainty will continue to weigh in on the global markets.
The dollar index, which gauges the greenback’s strength against a basket of major currencies, recovered Friday’s losses to settle up 0.48% at 97.83.
Elsewhere, foreign institutional investors (FIIS) were net sellers of shares in the local equity market worth Rs -1200.27 crore; according to the National Stock Exchange of India data published at the end of Thursday’s trading session. On the other hand, Domestic Institutional Investors (DIIs) were net buyers of equities worth Rs 1286.63 crore.
The domestic benchmark equity index NIFTY 50 recovered modestly following the worst sell off since October 2018. At the end of Monday close, NIFTY 50 index settled up 0.39% at 11,707.90. However, during early Asia trading hours on Tuesday, Indian shares shake off its post-Budget losses and was seen quoted at 11,954.05.
The Indian 10-year government bond yield was seen quoted at 6.51% in morning trade compared with its previous close of 6.51%.
Currently, at the interbank market, one US dollar buys 71.14 Rupees, down -0.24% as of 8:00 AM UTC.