Rupee opened higher, Dollar lower vs. major currencies

Friday,   21-Sep-2018   09:07 AM (IST)

The Indian rupee opened the day higher at 71.85/86 levels compared to its previous close at 72.37/38 levels as dollar index suffers its biggest decline in a month. Expectations of steps by policymakers to support rupee also helped. Brent crude little changed at $78.74, after falling by almost a percent in previous session following Trump’s criticism of OPEC on Twitter. Fall in dollar below 72.00 comes amid report by CNBC that India may begin payment to oil to Iran in rupees and speculation that RBI may open a special window for dollar demand from oil importers. Indian government bonds jump in early trade, with 10-year benchmark note hitting a two-week high, as rupee strengthens above 72 to dollar. It’s a good start to the equity market this morning as benchmark indices have begun on a good note. Positive global cues and a stronger start to the rupee is aiding sentiment on D-Street. The Nifty reclaimed 11,300 in the opening minutes. As per the technical indicators range for the USDINR pair may be 71.45-72.25 levels. Rupee has an immediate support at 72.10 levels. A breach of the same may see rupee at 72.38 followed by 72.65 levels. On the positive side rupee is likely to face resistance at 71.78 levels and if it is able to break the same then it may gain up to 71.65 levels followed by 71.30 levels.

The dollar struggled near two-month lows, while the yen also sagged on Friday on reduced safe haven demand amid a switch in investors' view that the Sino-U.S. trade conflict would be less damaging to global growth than initially feared. The dollar index against a basket of six major currencies stood at 93.910 after touching 93.829 overnight, its lowest since July 9.The index has fallen more than 1 percent this week, with investor flows being diverted away from the greenback to its peers such as emerging market currencies amid an ebb in U.S.-China trade war concerns. The better risk sentiment contrasted with a Reuters poll showing forecasters were unanimous in their view that the trade row between the world's two top economies is bad for growth. The euro was also a beneficiary of the shift in currency flows. The single currency was steady at $1.1777 after climbing 0.9 percent the previous day, when it had scaled a three-month peak of $1.1785.Helped by a bounce in currencies such as the Turkish lira and South African rand, ravaged earlier in the month by trade friction and domestic factors, MSCI's emerging market currency index rose to a three-week peak on Thursday. The Australian dollar, seen as a gauge of risk sentiment, stood near a three-week high of $0.7293 touched overnight. The Aussie has jumped nearly 1.9 percent this week. The dollar stood at 112.48 yen after advancing overnight to a two-month high of 112.585.The two-year Treasury yield has climbed to a decade high this week on the back of receding risk aversion and expectations for a hawkish Federal Reserve meeting next week. The Australian dollar, pound and euro also advanced significantly against the yen this week. China's yuan stood little changed at 6.835 per dollar in offshore trade after gaining 0.25 percent overnight.