Rupee opened higher, Yen falls vs. Dollar

Wednesday,   23-Jan-2019   09:09 AM (IST)

The Indian rupee opened the day higher at 71.1725/1825 levels compared to its previous close at 71.4350/4450 levels amid pullback in Brent crude and as dollar declines against most regional currencies. Brent crude fell 2% yesterday amid selloff on Wall Street; up 0.1% at $61.59 in Asia trading. Benchmark indices opened on a flat note with some negative bias on Wednesday taking cues from their Asian peers. At 9:25 AM, the S&P BSE Sensex was trading at 36,460, up 16 points, while the broader Nifty50 was at 10,931, up 8 points. Indian government bonds rise in thin early trade tracking overnight fall in crude oil prices and U.S. Treasury yields amid growing concerns over global economic growth. As per the technical indicators range for the USDINR pair may be 70.90-71.60 levels. Rupee has an immediate support at 71.44 levels. A breach of the same may see rupee at 71.59 followed by 71.72 levels. On the positive side rupee is likely to face resistance at 71.17 levels and if it is able to break the same then it may gain up to 71.04 levels followed by 70.89 levels.

The safe-haven yen fell versus its peers on Wednesday as concerns over slowing global growth and U.S.-Sino trade tensions dampened investors' appetite for riskier assets. The yen weakened by 0.3 percent versus the greenback to 109.73. Against the Aussie dollar, it fell by 0.5 percent. As expected, the Bank of Japan kept monetary policy unchanged and trimmed its inflation forecast, with a larger-than-expected drop in December export data earlier in the day underlining the need for continued support for the trade-reliant economy. The Australian dollar gained 0.15 percent versus the greenback to $0.7133. Currency markets have been whipsawed over recent weeks as traders tried to come to terms with a range of issues from Brexit to slowing global growth and the outlook for major central banks. On Monday, the International Monetary Fund (IMF) cut its 2019 and 2020 global growth forecasts, citing a bigger-than-expected slowdown in China and the euro zone, and said failure to resolve trade tensions could further destabilize a slowing global economy. Growth in China last year was the slowest since 1990 and is set to weaken further this year before stimulus measures start to kick in. Investors are hoping for a breakthrough in U.S.-Sino trade talks, with the tariff dispute between the world's largest economies already rippling through financial markets and global demand. A report by the Financial Times that the United States had rejected China's offer for preparatory trade talks dampened risk sentiment overnight, though it was later denied by a White House adviser. The dollar index was marginally higher at 96.32. Traders in interest rate futures are wagering that the Federal Reserve will stand pat on rates in 2019 in the face of risks both at home and globally. The dollar rally last year was mainly driven by the Fed's four rate hikes, so traders expect a pause in the tightening cycle to cap the U.S. currency. Data on Tuesday showed that Britain's labor market remained robust despite an economic slowdown ahead of Brexit. Average weekly earnings, including bonuses, rose by 3.4 percent on the year, the biggest rise since mid-2008. Sterling is sitting close to its highs last seen in mid-November, a sign that traders expect Britain to avoid a chaotic exit from the European Union despite the looming March 29 Brexit date. Since Prime Minister Theresa May’s divorce deal with the EU was rejected by lawmakers last week in the biggest defeat in modern British history, lawmakers have been trying to plot a course out of the crisis, yet no option has the majority support of parliament.