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Rupee lower, Yuan gains on trade talk hopes

Wednesday,   09-Jan-2019   12:24 PM (IST)

The Indian rupee is trading lower and is currently quoted 70.49/50 levels (12:21 pm) in the afternoon deals as foreign banks and oil importers stepped up dollar purchases tracking another surge in crude oil prices, outweighing opening gains triggered by expectations that the U.S. and China will resolve their trade disputes. So far rupee traded in the range of 70.05 to 70.4925 levels. After opening higher today morning, Sensex and Nifty are holding on to gains. Sensex is up about 150 points to 36.134.35, while the Nifty is trading below the 10,850-mark. As per the technical indicators, range for USDINR pair for the remaining part of the day may be 69.90 -70.65 levels. Rupee has an immediate support at 70.59 levels. A breach of the same may see rupee at 70.75 followed by 71.02 and 71.29 levels. On the positive side rupee is likely to face resistance at 70.17 levels and if it is able to break the same then it may gain up to 69.90 levels followed by 69.74 and 69.59 levels. In the forward segment 1mth, 3mth and 6mth annualized premia are currently trading at 4.06%, 3.97% and 4.03% respectively.

The Chinese Yuan and the Australian dollar gained on Wednesday in Asia following reports that Beijing and Washington may be making progress in resolving their trade dispute. Talks between the two countries were extended for a third day, according to various media, which added that negotiators made progress on issues including the purchase of U.S. goods and services. U.S. President Donald Trump is said to be eager to strike a deal with Beijing in an effort to help Wall Street recoup some of the steep losses suffered in recent months. The new round of talks began on Monday as Beijing and Washington hoped to reach an agreement before a March 1 deadline when U.S. tariffs on some $200 billion in Chinese goods would rise to 25% from 10%.The news lifted investor sentiment and pushed the safe-haven yen lower. The USD/JPY pair was up 0.14% to 108.87. Meanwhile, the AUD/USD pair traded 0.3% higher to 0.7156 following the news. The Australian dollar is widely considered as a proxy for Chinese economic growth as China is the country’s biggest importer for its commodities. The USD/CNY pair was down 0.2% to 6.8363. The People's Bank of China (PBOC) set the Yuan reference rate at 6.8526 vs. Tuesday's fix of 6.8402. The Chinese currency lost about 6% in 2018, with escalating China-U.S. trade war cited as a major headwind.