Rupee opened tad lower, Dollar lower vs. major currencies

Thursday,   30-Jul-2020   10:43 AM (IST)

The Indian rupee opened the day tad lower at 74.84/85 levels compared to its previous close at 74.7975/8075 levels as importers’ dollar demand outweighed the impact of upbeat risk appetite after the U.S. Fed maintained a dovish stance to support the country's virus-battered economy. Indian government bond yields were largely unchanged in early trade as market participants await auction of new 10-year note tomorrow. Indian equity markets were trading half a per cent higher on Thursday ahead of the monthly Futures and Options (F&O) contracts' expiry. At 10:05 AM, the S&P BSE Sensex was trading at 38,298 up 227 point, while the broader Nifty50 was at 11,269 up 67 point. As per the technical indicators range for the USDINR pair may be 74.60-75.10 levels. Rupee has an immediate support at 74.90 levels. A breach of the same may see rupee at 74.99 followed by 75.15 levels. On the positive side rupee is likely to face resistance at 74.73 levels and if it is able to break the same then it may gain up to 74.65 levels followed by 74.56 levels.

The dollar was mired at a more than two-year low on Thursday as the Federal Reserve repeated a pledge to limit damage from the pandemic as surging new coronavirus cases hamper the economy. The Fed's policy statement released at the close of its two-day meeting directly tied the economic recovery to an end the coronavirus health crisis. The dollar has been tumbling on expectations that the Fed will continue its ultra loose monetary policy for years to come and on speculation that it will allow inflation to run higher than it has previously indicated before raising interest rates. The dollar index fell 0.52% on Wednesday and steadied at around 93.275, its lowest in more than two years. The dollar traded at 104.97 yen, having fallen to 4-1/2-month low of 104.77 hit in previous trade. The greenback weakness supported the euro at $1.1792. The common currency had hit a two-year high of $1.1807 and is on course to post its biggest monthly gain in 10 years, having risen about 5% so far this month. Sterling also held firm against the dollar at $1.2998, just below Wednesday's 4-1/2-month high of $1.3013. The dollar's decline came as investors started to doubt the conventional wisdom that U.S. economic growth and investment returns from the U.S. currency would be higher than many other countries. The U.S. epidemic has intensified since June, with an average of around 65,000 new cases detected each day, putting a brake on the rebound in economic activity and dashing hopes of V-shaped recovery. A government reports due out later in the day is expected to show a record 34% drop in annualised economic output last quarter. Adding to investor alarm, U.S. congressional Republicans and Democrats were struggling to reach a deal on stimulus and slid toward letting a $600-per-week unemployment benefit lapse when it expires this week. Elsewhere, the Turkish lira dropped to a 2-1/2-month low against the dollar and a record low versus the euro, on rising concerns over depleted reserves and local demand for dollars despite state efforts to stabilize trading.