Rupee ended lower, Yen gains vs. Dollar

Monday,   29-Apr-2024   04:06 PM (IST)

The Indian rupee ended the session lower at 83.47/48 levels compared to its opening at 83.3850/3950 levels after touching the low of 83.50/51 levels pressured by month-end dollar demand from importers, while weakness in major Asian currencies also hurt the rupee. Asian currencies were mostly down between 0.1% and 0.3%. Rupee traded in the range of 83.3850-83.50 level today. Indian government bond yields were unchanged ahead of the Fed policy decision on Wednesday. Benchmark indices S&P BSE Sensex and NSE Nifty ended higher on the back of strong gains in banking stocks. BSE Sensex closed 1.28% or 941.12 points higher at 74,671.28 levels, while NSE Nifty50 closed 1% or 223.45 points higher at 22,643.40 levels. In the forward segment 1mth, 3mth and 6mth annualized premia ended the day at 1.19%, 1.23% and 1.36% respectively.

The yen jumped suddenly against the dollar on Monday, with traders citing yen-buying intervention by Japanese authorities to try to underpin a currency languishing at levels last seen over three decades ago. The dollar fell sharply to 155.01 yen from as high as 160.245 earlier in the day. Banking sources said Japanese banks were seen selling dollars for yen. It was last fetching 155.50 yen. Traders had been on edge for weeks for any signs of action from Tokyo to prop up a currency that has fallen 11% against the dollar so far this year. The yen plunged to 34-year lows even though the central bank exited from negative interest rates in a historic move last month. Currency traders have bet that despite the change, Japanese rates will remain low for some time in contrast to relatively high U.S. interest rates. Japan's top currency diplomat Masato Kanda declined to comment when asked if authorities had intervened. Japan's Ministry of Finance (MOF) was not immediately available for comment, with markets in the country closed for a holiday on Monday. A weaker yen is a boon for Japanese exporters, but is a headache for policymakers as it increases import costs, adds to inflationary pressures and squeezes households. Bank of Japan Governor Kazuo Ueda told a press conference after a meeting last week that monetary policy does not directly target currency rates, although exchange-rate volatility could have a significant economic impact. The yen had moved nearly 3.5 yen between 158.445 and 154.97 on Friday as traders vented their disappointment after the Bank of Japan kept policy settings unchanged and offered few clues on reducing its Japanese government bond (JGB) purchases - a move that might help put a floor under the yen. The yen has been under pressure as U.S. interest rates have climbed and Japan's have stayed near zero, driving cash out of yen and into higher-yielding assets. The U.S.-Japan government bond yield gap for 10-year tenures is about 375 bps, providing a powerful incentive for yen bears.