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Rupee opened higher, Dollar lower vs. major currencies

Tuesday,   23-Feb-2021   10:36 AM (IST)

The Indian rupee opened the day higher at 72.3550/3650 levels compared to its previous close at 72.5050/5150 levels as dollar index hovers near six-week low ahead of Fed Chair Jerome Powell’s semi-annual testimony. India's government bond yields trading marginally lower on value buying from some investors, after the yield spiked 24 basis points in the last six sessions. Indian shares rose on Tuesday after five straight sessions of falls, boosted by Reliance Industries after the company said it expected to receive approvals by the second quarter of the next fiscal year to hive off its oil-to-chemicals (O2C) business. At 10:06 AM, the S&P BSE Sensex was trading at 49,938 up 194 point, while the broader Nifty50 was at 14,756 up 81 point. As per the technical indicators range for the USDINR pair may be 72.25-72.65 levels. Rupee has an immediate support at 72.45 levels. A breach of the same may see rupee at 72.58 followed by 72.75 levels. On the positive side rupee is likely to face resistance at 72.27 levels and if it is able to break the same then it may gain up to 72.12 levels followed by 71.96 levels.

The dollar nursed losses near a six-week low on Tuesday while commodity currencies loitered around multi-year highs, as investors’ focus shifted to how U.S. Federal Reserve chief Jerome Powell might respond to resurgent inflation expectations. Surging prices for materials from oil and copper to lumber and milk powder have pushed currencies such as the Australian and New Zealand dollars to their highest in nearly three years. However, the gains have come with a worldwide rise in inflation expectations and a big sell-off in longer-dated bonds. Traders expect Powell, who testifies before Congress at 1500 GMT, to provide some reassurance that the Fed will tolerate higher inflation without immediately hiking rates, which they said could calm bond markets and eventually weigh on the dollar. Morning moves were slight ahead of his appearance, but renewed confidence that low U.S. interest rates will not lift anytime soon can likely clear the way for further gains in trade-exposed currencies at the dollar’s expense. The U.S. dollar index sat at 90.019 on Tuesday, just above its lowest since mid-January. The Australian dollar last bought $0.7913 and the kiwi $0.7323, with both trading broadly steady early in the Asia session. The euro made a small gain to $1.2165 and is poised to re-test resistance around $1.2220. Sterling, which has rallied nearly 3% this year as a speedy vaccine rollout has inspired confidence in the prospect of a British economic rebound, held above $1.40 at $1.4067. The Japanese yen, which has been the worst performing major currency of 2021 because it is sensitive to tumbling U.S. Treasury prices, steadied at 105.02 per dollar. Elsewhere bitcoin steadied above $50,000 after a wild overnight ride where it traded in a $10,000 range and dropped as low as $47,400.