Rupee opened lower, Dollar higher vs. major currencies

Thursday,   17-Jun-2021   10:54 AM (IST)

The Indian rupee opened the day weaker at 73.65/66 levels compared to its previous close at 73.3225/3325 levels after Fed projected interest rate hikes sooner than anticipated. Indian federal government bond yields rise tracking U.S. Treasuries after Federal Reserve moves its first projected rate increases to 2023 from 2024. Indian shares fell on Thursday for a second straight session, hurt by heavyweight financials stocks and conglomerate Reliance Industries, with sentiment dented by the U.S. Federal Reserve’s projection of hiking interest rates sooner than expected. At 10:20 AM, the S&P BSE Sensex was trading at 52,420 down 82 point, while the broader Nifty50 was at 15,741 down 27 point. As per the technical indicators range for the USDINR pair may be 73.40-74.00 levels. Rupee has an immediate support at 73.75 levels. A breach of the same may see rupee at 73.87 followed by 74.09 levels. On the positive side rupee is likely to face resistance at 73.55 levels and if it is able to break the same then it may gain up to 73.32 levels followed by 73.10 levels.

The dollar rose to its highest level in almost two months versus major peers on Thursday after the Federal Reserve brought forward its projections for the first post-pandemic interest rate hikes into 2023, citing an improved health situation and dropping a long-standing reference that the crisis was weighing on the economy. The dollar index, which tracks the currency against six rivals, ticked up to 91.459 in Asia, building on its nearly 1% surge overnight, the biggest gain since March of last year. Only New Zealand’s kiwi made any meaningful headway against the dollar among major currencies on Thursday, climbing 0.4% after data showed New Zealand’s economy grew much faster than expected in the first quarter. The kiwi had tumbled more than 1% on Wednesday. A majority of 11 Fed officials pencilled in at least two quarter-point interest rate increases for 2023, even as officials in their statement pledged to keep policy supportive for now to encourage an ongoing jobs recovery. The projections showed the outlook for inflation jumping this year, though the price increases were still described as “transitory.” Overall economic growth is expected to hit 7%. The benchmark 10-year Treasury yield was at 1.5890% in Asia, after rallying to as high as 1.5940% from as low as 1.4820% on Wednesday. The dollar climbed to an almost two-month high of $1.1984 per euro on Thursday, extending its gain of about 1% from the previous session. It strengthened to as high as 110.825 yen, a level not seen since April 1, adding to a 0.6% rally overnight. The Australian dollar dipped to $0.75975, the lowest since April 13, after tumbling 1% on Wednesday. Sterling slipped to the lowest since May 7 at $1.39745, and the Canadian dollar hit the weakest since May 5 at C$1.2292. Cryptocurrencies were also hurt by the dollar’s strength, with bitcoin hovering at $38,624 following a 4.5% slide Wednesday, and ether at $2,393 after a 7% selloff.