Rupee ended higher, Dollar gains vs. Major currencies

Wednesday,   28-Jul-2021   04:29 PM (IST)

The Indian rupee ended the session higher at 74.3750/3850 levels compared to its opening at 74.43/44 levels after touching the high of 74.31/32 levels on expiry-related dollar sales by foreign banks, while inflows from initial public offerings further aided gains. Rupee traded in the range of 74.31-74.49 levels today. Rupee had risen to an intraday high of 74.31/32 levels today, post the expiry of the July USD/INR currency futures contract at noon. That apart, there were flows related to the initial public offerings of Glenmark Life Sciences and Rolex Rings. Both the issues have been fully subscribed. Traders are awaiting the Federal Reserve’s policy outcome, due later today, which could potentially offer clues on how long monetary policy can stay accommodative. Market participants are divided on whether the Fed will continue with the wording or tone of the policy statement and continue to overlook inflation and focus on the recovery Or would it change its tone on back of rising covid cases of Delta variant, a development that has prompted a bit more uncertainty on the economic outlook. Indian federal government bond yields settled marginally higher for the second consecutive session ahead of the U.S. Federal Reserve’s monetary policy decision, due later today, while rising crude oil prices kept traders cautious. Indian shares closed down on Wednesday as pharma stocks slipped for the second straight session, while investors waited for the outcome of a U.S. Federal Reserve meeting. At close, the benchmark S&P BSE Sensex stood at 52,443.71, down 135.05 points or 0.26 per cent while Nifty50 was down 37 points or 0.24 per cent at 15,709.40. In the forward segment 1mth, 3mth and 6mth annualized premia ended the day at 3.79%, 3.80% and 3.97% respectively.

The dollar made marginal gains on Wednesday after being pinned down earlier, with investors holding off on placing major bets ahead of the outcome of a U.S. Federal Reserve meeting. The U.S. dollar index moved into positive territory after trading lower in Asian hours. The greenback was last up 0.1% at 92.534. The Japanese yen, Swiss franc and the euro held onto the previous day’s gains in Asian trading hours, with the safe-haven yen trading at 109.80 per dollar and the euro at $1.1809. The dollar has enjoyed a month-long rally after a hawkish shift from the Fed in June. Markets are waiting to see whether the Fed will provide any clues on the timing of tapering later in the day amid surging U.S. inflation. The Fed publishes a statement at 1800 GMT followed by a news conference from Chair Jerome Powell at 1830 GMT. Declining U.S. real yields, fuelled by concerns about high inflation and the economic outlook, also cast a shadow over the dollar earlier. The 10-year inflation-linked bond yield hit a record low overnight. The Chinese Yuan pulled away from three-month lows hit on Tuesday, when it saw its biggest daily losses since October, after the country’s stock market stabilised following a bruising couple of days. Still, the Yuan’s bounce was modest and the risk-sensitive Australian and New Zealand dollars both fell around 0.3% as sentiment remained fragile.