Rupee opened flat, Yen holding ground vs. Dollar

Tuesday,   30-Apr-2024   09:48 AM (IST)

The Indian rupee opened the day flat at 83.47/48 levels compared to its previous close at 83.47/48 levels amid likely dollar demand and expectations that RBI will not allow rupee to hit a new all-time low. Indian government bond yields marginally lower in early trade as U.S. yields retreat further from recent highs. Equity benchmark indices opened higher today tracking global peers. At 9:25 AM, the S&P BSE Sensex was trading at 74,746 up 76 points, while the broader Nifty50 was at 22,676 up 32 points. As per the technical indicators range for the USDINR pair may be 83.30-83.55 levels. Rupee has an immediate support at 83.53 levels. A breach of the same may see rupee at 83.58 followed by 83.65 levels. On the positive side rupee is likely to face resistance at 83.38 levels and if it is able to break the same then it may gain up to 83.30 levels followed by 83.25 levels.

The yen held its line against the dollar on Tuesday after making sharp gains the previous day in moves that traders said were sparked by suspected intervention by Japanese authorities. The Japanese currency was trading a touch lower 0.16% at 156.56 per dollar, but was well off its 34-year low of 160.245 hit on Monday when traders say yen-buying intervention by Tokyo drove a sizeable rebound of nearly six yen. Japanese authorities haven't confirmed that they had stepped into the currency market in support of the yen, but markets remain on heightened intervention alert ahead of the Federal Reserve's monetary policy review this week. Japan's top currency diplomat Masato Kanda said on Tuesday that authorities were ready to deal with foreign exchange matters "24 hours", but declined again to comment on whether the finance ministry had intervened. Trading in Asia was thinner than normal on Monday due to Japan's Golden Week holiday as the yen saw its biggest one-day gain this year on the dollar. Official figures that would reveal whether intervention did in fact occur won't be available until late May. Markets in Japan will be closed again on Friday for the holiday. The Japanese currency still sits lower than it was before the Bank of Japan's policy announcement last week. That could bode ill for the yen as the Fed begins its two-day monetary policy meeting on Tuesday, where it's expected to holds rates at 5.25%-5.5%, with U.S. inflation proving to be sticky. The BOJ's go-slow approach on interest rate increases, following its landmark decision to ditch negative rates in March, has traders betting that Japanese bond yields will remain low for an extended period. In contrast, U.S. rates are still relatively high and provide enough latitude for yen bears. A fragile economic recovery is also likely to constrain BOJ's options as any over-tightening in policy could tip Japan into recession. Data showed Japan's factory output rose at a better than expected 3.8% pace in March from the previous month, though retail sales for the same month undershot market forecasts. The dollar consolidated around 105.73 against a basket of currencies ahead of the Fed's meeting, after slipping 0.25% in the previous session. Traders have continued to pare back bets of Fed rate cuts this year amid the hotter-than-expected U.S. economic data and stubborn inflation numbers. A rate cut in September was looking like a close call at just 44%, according to CME Group's FedWatch tool. However, other major central banks such as the European Central Bank (ECB) and the Bank of England may begin to cut rates in the near future. Markets could glean more clues on the timing of ECB's rate-easing cycle from European inflation data this week due later on Tuesday.