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Rupee opened higher, Dollar gains vs. major currencies

Friday,   09-Nov-2018   09:14 AM (IST)

The Indian rupee opened the day higher at 72.70/71 levels compared to its previous close at 72.9950/73.0050 levels as oil prices slip further, with US benchmark slipping into bear market. The benchmark indices opened lower on Friday taking similar cues from their Asian peers.  At 9:27 AM, the S&P BSE Sensex was trading at 35,110 down 128 points while the broader Nifty50 was at 10,576, down 23 points. Indian government bonds higher in thin early trade as crude oil prices ease further and local currency rises. As per the technical indicators range for the USDINR pair may be 72.50-73.15 levels. Rupee has an immediate support at 72.93 levels. A breach of the same may see rupee at 73.15 followed by 73.30 levels. On the positive side rupee is likely to face resistance at 72.60 levels and if it is able to break the same then it may gain up to 72.45 levels followed by 72.30 levels.

The dollar gained against its major peers on Friday as the U.S. Federal Reserve kept interest rates steady but reaffirmed its monetary tightening stance, setting the stage for a rate hike in December. Broader risk appetite took a step back in global trade, following this week's strong Wall Street relief rally after the U.S. midterm elections produced no major political surprises for investors. In foreign exchange markets, investor focus is now shifting back to the divergence between the monetary policies of the United States and other major economies, such a Japan where interest rates are seen staying extremely low. The yen, as a result, remains near a five-week low against the dollar. The dollar index traded at 96.63 on Friday, after clocking a gain of 0.66 percent on Thursday. The Fed has raised its key policy rate three times this year, and the market expects another rate hike in December on the back of a robust U.S. economy, rising inflation and solid jobs growth. The dollar has gained 2.4 percent versus the yen over the last 10 trading sessions due to the diverging monetary policies of the Fed and the Bank of Japan. While the Fed is on track to raise interest rates, the BOJ is expected to keep its ultra loose monetary policy due to low growth and inflation. The widening interest rate differential between U.S. and Japanese bonds has made the dollar a more attractive bet than the yen, which is often a funding currency for carry trades. Meanwhile, the euro traded at $1.1366 on Friday, relatively unchanged in early Asian trade. The single currency fell 0.54 percent on Thursday as traders reacted to negative news out of Europe. The European Commission forecast on Thursday that the Italian economy would grow more slowly in the next two years than Rome thinks, making government budget deficits much higher than assumed by Italy. The standoff between the EU and Rome over Italy's budget deficit and concerns over Europe's slowing economic growth have dragged the euro which has fallen 4.2 percent versus the dollar over the last six months. The British pound changed hands at $1.3062 on Friday, trading marginally higher versus the dollar. The sterling has gained 2.3 percent against the dollar in November. The pound has benefited from growing investors expectations that Britain is close to reaching a deal with the European Union less than five months before it is due to exit the bloc. The Australian dollar gained 0.1 percent to trade at $0.7262. The Aussie dollar has rallied more than 3.3 percent since it hit a more than a two-year low of $70.18 on Oct. 26.