Rupee opened tad higher, Dollar higher vs. major currencies
Wednesday,
18-Oct-2017
09:10 AM (IST)
The Indian rupee opened the day tad higher at 64.98/99 levels compared to its previous close at 65.02/03 levels tracking gains in most Asian currencies following pause in recent dollar rally. Indian government bonds trading steady in early session as traders await minutes of MPC’s October meeting, while sentiment cautious ahead of long weekend. The benchmark indices extended losses for the second straight day after Axis Bank tanked over 7% to Rs 475 as asset quality of the private lender worsened in the September quarter. Muted trend seen in Asian markets also contributed to losses. As per the technical indicators range for the USDINR pair may be 64.80-65.20 levels. Rupee has an immediate support at 65.11 levels. A breach of the same may see rupee at 65.20 followed by 65.35 levels. On the positive side rupee is likely to face resistance at 64.92 levels and if it is able to break the same then it may gain up to 64.86 levels followed by 64.71 levels.
The dollar held an upper hand against other major currencies on Wednesday as investors weigh the possibility that U.S. President Donald Trump will choose a more hawkish Federal Reserve chief with than the current chair, Janet Yellen. With the Federal Reserve expected to raise interest rates for the third time this year in December, markets are now looking to who will lead the Federal Reserve after Yellen’s term expires next February. Trump has a pool of five candidates to choose from for the next chair of the Federal Reserve and is likely to announce his choice before going to Asia in early November, a source familiar with the situation said on Tuesday. The dollar got an extra boost this week after Stanford University economist John Taylor emerged as a major candidate. Taylor is known as a proponent of a rule-based monetary policy and according to his formula, known as the Taylor rule, the Fed funds rate needs to be much higher than the current target of 1.0-1.25 percent. Thus investors bet he could raise interest rates faster. However, the dollar made less headway against the yen, as investors remain hesitant to take big positions ahead of Japan’s election on Sunday. Although Prime Minister Shinzo Abe’s ruling party is expected to maintain a solid majority, the memory of recent election upsets in the United Kingdom and elsewhere has kept investors cautious.
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