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Rupee opened higher, Dollar down vs. major currencies

Wednesday,   25-Nov-2020   11:02 AM (IST)

The Indian rupee opened the day higher at 73.9825/9925 levels compared to its previous close at 74.0050/0150 levels and moved up to 73.95/96 levels in early deals tracking a broad dollar decline and buoyant local equities. Bets that the Reserve Bank of India will cap an upside in the local unit, trimmed speculative bets on the rupee. Indian government bond yields tad higher as market participants await auction of new 10-year note as well as economic growth data, both due on Friday. Equity markets extended their record-breaking run on Wednesday on the back of favourable global cues. At 10:08 AM, the S&P BSE Sensex was trading at 44,649, up 126 point, while the broader Nifty50 was at 13,102 up 47 points. As per the technical indicators range for the USDINR pair may be 73.70-74.20 levels. Rupee has an immediate support at 74.12 levels. A breach of the same may see rupee at 74.24 followed by 74.37 levels. On the positive side rupee is likely to face resistance at 73.87 levels and if it is able to break the same then it may gain up to 73.74 levels followed by 73.62 levels.

The dollar was down on Wednesday morning in Asia, after increasing optimism over a global economic recovery saw investors turn towards riskier asset. However, markets saw small moves overall. The optimism, prompted by the possibility of a COVID-19 vaccine becoming available soon and clarity over the incoming U.S. presidential administration, saw the Dow Jones Industrial Average rose above 30,000 for the first time during the previous session. Asia Pacific shares were up on Wednesday. The U.S. Dollar Index that tracks the greenback against a basket of other currencies edged down 0.17% to 92.067. The dollar slumped to a near two-month low against the riskier AUD and NZD, and close to a two-week low against the euro. With AstraZeneca PLC reporting positive results for its candidate AZD 1222 on Monday, and candidates from Pfizer Inc and Moderna Inc also reporting positive results over the past two weeks, hope is rising that a vaccine will be available soon. Incumbent President Donald Trump reluctantly starting to co-operate with President-elect Joe Biden’s administration for a smooth transition, adding to the optimism. However, Trump has given no indication that he will stop the legal challenges he has mounted against the presidential election results. With a vaccine and the likely nomination of former Federal Reserve Chairman Janet Yellen, a vocal advocate for more fiscal spending, as Biden’s Secretary of the Treasury removing two large uncertainties for investors, the dollar’s decline only looks likely to continue in the short term as its appeal as a safe harbor currency is diminished. Another indication of the increased risk appetite was cryptocurrency bitcoin, associated with extreme volatility, trading near an all-time high. The U.S. will release a slew of data later in the day, ahead of Thursday’s Thanksgiving holiday. These include the Federal Reserve’s minutes of the most recent Federal Open Market Committee meeting, U.S. jobless claims and GDP data.