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Rupee trims early gains, Euro recovers

Friday,   15-Mar-2019   12:20 PM (IST)

Indian rupee rose to a seven-month high against the dollar in early trade, on the back of persistent foreign portfolio and corporate inflows. After opening at 69.33/34 levels, against its previous close of 69.3525/3625 levels, rupee powered its way to touch a high of 69.11/12 levels at 09:22hrs. However, it trimmed some gains after suspected dollar buying by a state-run bank, probably on behalf of the Reserve Bank of India. Rupee is currently trading at 69.1850/1950 levels (12:13hrs). On the back of the flows, rupee is the best performing major Asian currency this month and BSE Sensex is the top performing regional gauge. The Sensex is headed for a fifth day of advance, up 0.68% (256.54 points) at 38011.43 while Nifty was up 0.69% (79.15 points) at 11422.75 at 1215 hrs. Meanwhile, traders continue to watch for the forward USD/INR premiums following Reserve Bank of India’s announcement that it will induct rupee liquidity via forex swaps. In the forward segment 1mth, 3mth and 6mth annualized premia are currently trading at 4.33%, 4.11% and 3.80% respectively. As per the technical indicators, range for USDINR pair for the remaining part of the day may be 68.80-69.50 levels. Rupee has an immediate support at 69.32 levels. A breach of the same may see rupee at 69.44 followed by 69.54 and 69.65 levels. On the positive side rupee is likely to face resistance at 69.10 levels and if it is able to break the same then it may gain up to 68.99 levels followed by 68.87 and 68.76 levels.

The dollar index was down 0.14% at 96.65 after it rose 0.2% yesterday to end a four-day losing run. Most Asian currencies were flat after U.S. Treasury Secretary Steven Mnuchin reportedly said that a meeting between U.S. President Donald Trump and Chinese President Xi Jinping will not happen by the end of this month, as was previously planned. The Reuters report quoted Mnuchin as additionally saying that both countries were "working in good faith" to try to reach a deal "as quickly as possible." EUR/USD was on a recovery mode ahead of European open. The EUR is recovering yesterday’s losses as traders prefer risk-assets over the USD on recently positive Brexit reports. Markets turned to risk-on after the British members of parliament (MPs) voted for delaying the Brexit deadline from March 29. Traders now await second-tier data from the Eurozone and the US that could direct near-term market moves while risk sentiment will keep playing in the background.