Rupee opened higher, Dollar lower vs. major currencies

Thursday,   06-Aug-2020   10:42 AM (IST)

The Indian rupee opened the day higher at 74.82/83 levels compared to its previous close at 74.94/95 levels ahead of MPC policy review. A fall in the dollar index also aided the local currency. Indian government bond yields largely unchanged in thin-volume early trade as investors await MPC policy decision at noon today. Indian stock markets opened in the green territory on Thursday amid broad-based buying. At 10:09 AM, the S&P BSE Sensex was trading at 37,854 up 191 point, while the broader Nifty50 was at 11,158 up 56 point. As per the technical indicators range for the USDINR pair may be 74.60-75.15 levels. Rupee has an immediate support at 74.94 levels. A breach of the same may see rupee at 75.04 followed by 75.20 levels. On the positive side rupee is likely to face resistance at 74.75 levels and if it is able to break the same then it may gain up to 74.64 levels followed by 74.55 levels.

The dollar struggled to stem its broad decline on Thursday as investors worried the U.S. economic recovery may lag other countries due to a high level of coronavirus infections while the global economy slowly gets back on its feet. The dollar’s index against a basket of currencies edged down 0.1% to 92.719, having fallen more than 0.5% in the previous session to approach its two-year low of 92.539 marked last Friday. Decline in the U.S. currency has gathered pace since late July on rising perception that U.S. economic recovery could be hobbled by the country’s poor performance in containing the COVID-19 outbreak. The euro changed hands at $1.1874, having gained 0.5% in the previous day's trade to stand just below Friday's two-year high of $1.1908, extending its bull run since European leaders agreed on a recovery fund on July 21. The common currency held an upper hand against the yen, trading at 125.27 yen, having hit its highest level since April last year in the previous session. The U.S. currency traded at 105.52 yen, having eased a tad in the past two days. The dollar extended losses on Wednesday after the ADP National Employment Report showed U.S. private payrolls growth slowed sharply in July, suggesting the labour market recovery was faltering. U.S. services industry activity gained momentum in July as new orders jumped to a record high, but hiring declined, a separate survey by the Institute for Supply Management (ISM) also showed. With more than 30 million people on jobless benefits, recovery in employment is seen as critical to the U.S. economic outlook, with many investors counting on another fiscal stimulus to support the economy. Top congressional Democrats and White House officials appeared to harden their stances on new coronavirus relief legislation, however, as negotiations headed toward an end-of-week deadline with no sign of an agreement. Sterling also edged near Friday's 4-1/2-month high of $1.3170, last quoted at $1.3137. The Bank of England looks set to hold off from taking further action at its policy review later in the day, by keeping its benchmark interest rate at an all-time low of 0.1% and its bond-buying stimulus programme unchanged at 745 billion pounds ($980 billion). The U.S. dollar sank to its lowest level in almost half a year against the Canadian dollar to C$1.3262. The offshore Chinese Yuan traded at 6.9423 per dollar, having hit a five-month of 6.9324 on Wednesday. Gold was by far the best performer, hitting a record high of $2,055.3 per ounce overnight and last stood at $2,039.5, supported by demand for hedge against the dollar’s decline.