Rupee opened lower, Dollar lower vs. major currencies

Wednesday,   17-Jan-2018   09:06 AM (IST)

The Indian rupee opened the day lower at 64.0750/0850 levels compared to its previous close at 64.0325/0425 levels amid continued concerns over India's widening trade deficit. Benchmark indices are range bound following Asian stocks that stepped back from a record high today as the region’s resource shares were dented by falling oil and commodity prices while digital currencies tumbled on worries about tighter regulations. Indian government bonds marginally higher in early trade as prices at record lows attract buyers. Sentiment stays bearish after RBI official’s warning to banks to manage their own interest risk and ahead of federal budget next month. As per the technical indicators range for the USDINR pair may be 63.65-64.15 levels. Rupee has an immediate support at 64.20 levels. A breach of the same may see rupee at 64.31 followed by 64.40 levels. On the positive side rupee is likely to face resistance at 63.81 levels and if it is able to break the same then it may gain up to 63.70 levels followed by 63.60 levels.

The dollar fell to a three-year low against its peers on Wednesday, with an earlier bounce sputtering as the euro edged back after shaking off a potentially negative turn in German politics. The dollar index momentarily recovered to 90.826 on Tuesday after slipping steadily this month on expectations major central banks would eventually normalize monetary policy. But its rebound dissipated as underlying fundamental expectations that had weakened the greenback so far this year remained intact. The common currency had slid to $1.2195 on Tuesday after news which suggested the ECB might not tweak its policy message very soon curtailed the currency’s rally. The euro was also weighed on Tuesday as members of the center-left Social Democrats (SPD) in one of Germany’s regions voted against talks with Angela Merkel’s conservative Christian Democrats (CDU), stoking worries over whether the German chancellor could form a “grand coalition”. The Canadian dollar was a shade stronger at C$1.2424 per dollar with immediate focus on the Bank of Canada's monetary policy decision due later in the day. The BoC is widely expected to raise interest rates by 25 basis points and take the benchmark borrowing cost to 1.25 percent, adding to views that rates will be higher globally this year. Markets expect the central bank to hike as many as three times in 2018.