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Rupee opened higher, Dollar higher vs. major currencies

Wednesday,   13-Oct-2021   10:54 AM (IST)

The Indian rupee opened the day higher at 75.3150/3250 levels compared to its previous close at 75.51/52 levels tracking a pullback on the dollar and Treasury yields ahead of U.S. inflation data and minutes of the Federal Reserve's latest meeting.  Indian shares hit new highs on upbeat growth outlook. Sensex is up on quick recovery bets amid pickup in vaccination pace, receding odds of third virus wave, government reforms and benign inflation. India's retail inflation rate eased to 4.35% in September, its lowest in five months, from 5.3% in previous month. India’s federal government bond yields down marginally as retail inflation eased for fourth consecutive month in September. Indian shares hit record highs on Wednesday, as Tata Motors surged after pledging to boost investments in its electric vehicle business, while an emergency use nod for Bharat Biotech's COVID-19 vaccine in kids also supported sentiment. At 10:18 AM, the S&P BSE Sensex was trading at 60,605 up 321 point, while the broader Nifty50 was at 18,112 up 120 point. As per the technical indicators range for the USDINR pair may be 74.90-75.60 levels. Rupee has an immediate support at 75.38 levels. A breach of the same may see rupee at 75.65 followed by 75.93 levels. On the positive side rupee is likely to face resistance at 75.15 levels and if it is able to break the same then it may gain up to 74.89 levels followed by 74.65 levels.

The dollar held near a one-year high versus major peers on Wednesday, amid rising expectations the Federal Reserve will announce a tapering of stimulus next month, potentially following with interest rate hikes by mid-2022. Three Fed policymakers said overnight that the U.S. economy has healed enough to begin to scale back the central bank’s asset-purchase programme, including Vice Chair Richard Clarida. Money markets now price about a 50-50 chance of a rate increase by July. The dollar index, which measures the greenback against six rivals, eased slightly to 94.460 from Tuesday, when it touched 94.563 for the first time since late September 2020. A surge in energy prices has fuelled inflation concerns and stoked bets that the Fed may need to move faster to normalise policy than officials had projected, sending two-year Treasury yields to their highest in more than 18 months overnight. Higher U.S. yields helped push the dollar to a three-year high against the yen on Tuesday at 113.785 yen. The pair last traded at 113.485.  The euro changed hands at $1.1541, well within sight of the previous session’s $1.1522, its lowest in nearly 15-month months. Traders will focus on consumer price data later on Wednesday for further insight into the timing of higher rates. Most Fed policymakers continue to say inflationary pressures will prove transitory. Governors Lael Brainard and Michelle Bowman are among the Fed officials due to speak later Wednesday, when the minutes of the central bank’s September meeting are also due to be released. Sterling meandered in the middle of this month’s range, trading little changed from Tuesday at $1.3596. The risk-sensitive Aussie dollar slipped 0.2% to $0.7335, retreating from Tuesday’s one-month high at $0.7384. Bitcoin traded around $56,500, after reaching a five-month high of $57,855.79 at the start of the week.