Rupee opened higher, Dollar lower vs. major currencies

Wednesday,   20-Oct-2021   10:42 AM (IST)

The Indian rupee opened the day higher at 75.1125/1225 levels compared to its previous close at 75.34/35 levels tracking broad dollar losses amid firm risk appetite. India’s federal government bond yields rise tracking U.S. Treasuries. Indian shares edged down on Wednesday, dragged mostly by metal stocks as China's pledge to bring down coal prices eased worries about supply disruptions. At 10:15 AM, the S&P BSE Sensex was trading at 61,829 up 113 point, while the broader Nifty50 was at 18,438 up 20 point. As per the technical indicators range for the USDINR pair may be 74.90-75.40 levels. Rupee has an immediate support at 75.24 levels. A breach of the same may see rupee at 75.39 followed by 75.55 levels. On the positive side rupee is likely to face resistance at 75.00 levels and if it is able to break the same then it may gain up to 74.90 levels followed by 74.78 levels.

U.S. bonds drove currencies on Wednesday, with a rise in long-term rates pushing the dollar to an almost four-year high on the yen, but a decline in shorter-dated yields putting it on the back foot against most other major peers. The dollar and yen were also under pressure from a global equity rally that sapped demand for assets regarded as safe havens. The dollar climbed as high as 114.585 yen for the first time since November 2017, with benchmark 10-year Treasury yields touching a fresh five-month high at 1.6630% in Asia. Higher long-term U.S. yields increase the allure of those assets to Japanese investors. However, two-year Treasury yields hovered around 0.4050% after retreating sharply overnight from Monday’s 19-month high of 0.4480%, signalling a scaling back of bets for early Federal Reserve interest rate hikes. That contrasted to a rise in wagers this week for faster rate increases in the U.K. and New Zealand, which also pulled up expectations in neighbours like the euro zone and Australia. The dollar index - which measures the greenback versus six rivals, including the yen - was little changed at 93.822 from Tuesday, when it lost about 0.2% and dipped to the lowest this month at 93.501. The U.S. economic outlook got a little less rosy on Tuesday after data showed that U.S. homebuilding unexpectedly fell in September and permits dropped to a one-year low amid acute shortages of raw materials and labour, supporting expectations that economic growth slowed sharply in the third quarter. Richmond Fed President Thomas Barkin said on Tuesday that U.S. labour shortages may outlast the coronavirus pandemic and limit overall economic growth unless the country comes up with better education, health and childcare policies to boost the number of people willing and able to work. The euro was about flat at $1.16335 from Tuesday, when it jumped as high as $1.1670 for the first time since Sept. 29. Sterling was little changed at $1.3793 after touching a one-month peak of $1.3834 in the previous session. The risk-sensitive Australian dollar traded slightly weaker at $0.74725, but remained close to Tuesday’s more than three-month top at $0.74855. New Zealand’s kiwi dollar was little changed at $0.71565, near the highest since June 11 at $0.7172, reached overnight. In the equities space, Asia-Pacific stocks extended a global rally on Wednesday, with an index of regional shares adding 0.33%.