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Rupee opened higher, Dollar lower vs. major currencies

Wednesday,   10-Oct-2018   09:08 AM (IST)

The Indian rupee opened the day higher at 74.15/16 levels compared to its previous close at 74.39/40 levels as pause in US bond selloff boosts Asian currencies. Benchmark indices are trading higher following firm rupee and mixed Asian markets. At 9:42 AM, the S&P BSE Sensex was trading at 34,505, up 205 points while the broader Nifty50 was ruling at 10,331, up 30 points. Indian government bonds rise in early trade as rupee gains and as central bank’s announces INR120 billion open market bond purchase tomorrow. Prime Minister Narendra Modi’s government is considering tapping Indians living overseas to lure foreign exchange flows and prop up a sagging rupee according to people with knowledge of the matter. Officials from the finance ministry and the central bank are discussing a plan to raise money from non-resident Indians, the people said asking not to be named as the information is not public. As per the technical indicators range for the USDINR pair may be 73.90-74.55 levels. Rupee has an immediate support at 74.38 levels. A breach of the same may see rupee at 74.54 followed by 74.73 levels. On the positive side rupee is likely to face resistance at 74.00 levels and if it is able to break the same then it may gain up to 73.67 levels followed by 73.48 levels.

The dollar slipped further from seven-week highs on Wednesday after U.S. Treasury yields edged lower overnight while sterling took some comfort on hopes Britain and the European Union might be close to a Brexit deal. The greenback's rally against its major peers paused despite looming uncertainty over a slate of issues, including the intensifying Sino-U.S. trade dispute and Italy's budget plans. The dollar index was largely unchanged at 95.644, not far off 96.163 reached during the previous session - its highest level since Aug. 20. The euro got a lift from a Dow Jones Newswires report that an agreement on the terms for Britain to leave the economic bloc may be reached as soon as Monday. Dow Jones, citing unidentified diplomats, said Britain and the EU had narrowed their differences around the Irish border but some issues have not been resolved. The pound gained 0.1 percent to a near two-week high of $1.3156, after tacking on 0.4 percent during the previous session. The euro added 0.1 percent to $1.1507. The single currency slipped overnight to a seven-week low of $1.14325 after yields on Italy's 10-year paper hit a 4-1/2 year high, despite comments from Italian Economy Minister Giovanni Tria. Tria said that Italy will do whatever is necessary to restore calm if market turbulence turns into a financial crisis, adding fears over the country's budget plan for next year were unjustified though his remarks failed to reassure investors. The European Commission warned last week that Italy's deficit plans represented "a significant deviation from the fiscal path recommended by the Council". The Chinese Yuan held steady near a seven-week low against the greenback after a liquidity squeeze in the offshore Yuan market in Hong Kong on Tuesday helped stabilize sentiment.