New Delhi, Jan 22 || The overnight signs of a climbdown in Greenland-related tensions will provide relief to market sentiments and rupee volatility is likely to persist in the near term but depreciation is expected to be more gradual than the recent sharp moves, a report showed on Thursday.
The rupee rebounded from its all-time low levels to gain 15 paise at 91.50 against the US dollar in early trade on Thursday.
According to Radhika Rao, Executive Director and Senior Economist at DBS Bank, the bearish handover from last year was further fuelled by a confluence of global as well as domestic cues.
“A sharp rise in the global VIX reflected weakness across market indicators, not helped by unfavourable geopolitical developments and jump in global bond yields. In this context, overnight signs of a climbdown in Greenland-related tensions will provide relief to market sentiments,” she noted.
A momentous trade deal with the European Union is within reach (likely to be finalised next week), and some optimism has resurfaced over the US-trade trade negotiations after constructive remarks out of the World Economic Forum (WEF) meeting Davos.