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Rupee opened almost flat, Dollar higher vs. major currencies

Tuesday,   12-Feb-2019   09:02 AM (IST)

The Indian rupee opened the day almost flat at 71.1725/1825 levels compared to its previous close at 71.1650/1750 levels. Indian government bonds trading little changed in thin-volume session ahead of fresh state debt supply today, while participants await release of January retail inflation data post market hours. Benchmark indices opened on a flat note amid firm Asian markets which rose on the possibility of the US-China striking a deal to end the ongoing tariff war. At 9:30 AM, the S&P BSE Sensex was trading at 36,385, down 10 points, while the broader Nifty50 was ruling at 10,892, up 4 points. As per the technical indicators range for the USDINR pair may be 70.80-71.30 levels. Rupee has an immediate support at 71.26 levels. A breach of the same may see rupee at 71.37 followed by 71.48 levels. On the positive side rupee is likely to face resistance at 70.99 levels and if it is able to break the same then it may gain up to 70.85 levels followed by 70.68 levels.

The dollar held close to its 2019 high on Tuesday as U.S.-Sino trade tensions and global growth worries underpinned the greenback’s safe-haven appeal, while the euro and the British pound were hurt by troubles of their own. Investors are focusing on high level trade talks in China this week where Washington is expected to keep pressing Beijing on long-standing demands that it make sweeping structural reforms to protect American companies’ intellectual property, to end policies aimed at forcing the transfer of technology to Chinese companies, and curb industrial subsidies. This week’s talks come as the world’s two largest economies try to hammer out a deal before a March 1 deadline, after which U.S. tariffs on $200 billion worth of Chinese imports are scheduled to increase to 25 percent from 10 percent. Financial markets have been roiled by the trade tensions over the past year, with business sentiment taking a hit around the world as the fallout of the U.S.-China dispute disrupted factory activity and hurt global growth. The dollar has gained on other safe havens such as the yen and franc over the last week. It was steady against the yen at 110.37 and a touch higher versus the Swiss franc at 1.0040. The dollar index was steady at 97.06, after advancing 0.45 percent in the previous session, its largest percentage gain since Jan. 24. The index has risen for eight straight sessions, mainly thanks to a tumbling euro, which has the largest weighting in the index. The single currency was off slightly at $1.1272 in early Asian trade, having lost nearly half a percent on Monday. The euro has weakened for six consecutive sessions, and traders expect further losses now that the crucial psychological support of $1.13 has been broken. The European Central Bank is expected to maintain a highly accommodative monetary policy this year as growth slows in the eurozone and inflation stays low. Last week, the European Commission sharply cut its forecasts for euro zone growth for this year and next. Elsewhere, sterling was marginally higher at $1.2857, after tumbling 0.75 percent in the previous session. Analysts expect the British pound to remain volatile due to the uncertainty surrounding Brexit. The British parliament is set to hold a debate on Brexit on Feb. 14 where Prime Minister Theresa May is seeking changes to her deal with Brussels after it was rejected by a record majority in parliament last month.