Rupee opened higher, Dollar down vs. major currencies

Wednesday,   20-Jan-2021   10:50 AM (IST)

The Indian rupee opened the day higher at 73.11/12 levels compared to its previous close at 73.1650/1750 levels as prospects of more US fiscal stimulus weigh on dollar. India's government bond yields largely unchanged; traders await central bank’s debt purchase tomorrow. Indian shares inched higher on Wednesday in the run-up to a slew of corporate earnings and on positive global cues after U.S. Treasury Secretary nominee Janet Yellen advocated for a huge fiscal relief package in the United States. At 10:08 AM, the S&P BSE Sensex was trading at 49,592 up 194 point, while the broader Nifty50 was at 14,575 up 54 point. As per the technical indicators range for the USDINR pair may be 72.95-73.35 levels. Rupee has an immediate support at 73.22 levels. A breach of the same may see rupee at 73.35 followed by 73.42 levels. On the positive side rupee is likely to face resistance at 73.05 levels and if it is able to break the same then it may gain up to 72.94 levels followed by 72.80 levels.

The dollar was down on Wednesday morning in Asia, with investors digesting U.S. Secretary of the Treasury nominee Janet Yellen’s big spending comments. The euro held onto its gains as a better-than-expected sentiment survey in Germany brightened the mood. The U.S. Dollar Index that tracks the greenback against a basket of other currencies edged down 0.11% to 90.365. The safe-haven yen briefly passed the 104 mark against the dollar over the improved sentiment but fell against other major currencies earlier in the session. The Bank of Japan is also due to hand down its policy decision on Thursday. The risk-sensitive Antipodean currencies saw gains during Wednesday’s session, holding onto the gains made during the previous session. The USD/CNY pair inched down 0.03% to 6.4757. The yuan held onto modest gains in offshore trade ahead of the People’s Bank of China announcing January's loan prime rate. No changes are expected in both the one-year and five-year loan prime rates. The pound was supported after Bank of England chief economist Andrew Haldane’s prediction during a webinar on Tuesday that the U.K.’s economy could begin to recover “at the rate of knots” from the second quarter of 2021. Meanwhile, Yellen urged Congress to “act big” on COVID- 19 relief and not worry too much about debt during her Senate confirmation hearing before the Senate Finance Committee on Tuesday. Her comments helped mitigate the risk-adverse tone seen earlier in the week and turned investors away from the safe-haven U.S. currency. Yellen could be confirmed as soon as Thursday to head the Treasury, and U.S. President-Elect Joe Biden will take office later in the day. Investors are paying more attention to the blitz of policies promised, rather than the inauguration itself. Across the Atlantic, the euro gained around 0.4% against the dollar overnight, and hovered around $1.2145 earlier in the session. The currency was boosted by both the Italian government surviving a confidence vote as well as a better-than-expected ZEW economic sentiment survey in Germany. The index read 61.8 for January, above the 60 in forecasts prepared by Investing.com and December’s 55 reading. The European Central Bank is also due to hand down its policy decision on Thursday.