Rupee at record low, Dollar up vs. major currencies

Tuesday,   17-May-2022   09:55 AM (IST)

The Indian rupee weakened to touch a record low of 77.76 levels versus the dollar, tracking broad gains in the U.S. currency alongside weakening in offshore markets, with traders watching the domestic share market for clues to fund flows. Rupee opened the day lower at 77.69/70 levels compared to its previous close at 77.45/46 levels tracking rupee’s decline in offshore markets amid elevated oil prices and persistent portfolio outflows.  India's sovereign bond yields rose in early session, as oil prices climbs seven-week high, while bond sales from central bank for second consecutive week further hurt sentiment. Indian share markets were trading up with all eyes on the listing of state-run Life Insurance Corp, the country's biggest IPO, set for later in the session. At 9:32 AM, the S&P BSE Sensex was trading at 53,352 up 378 point, while the broader Nifty50 was at 15,958 up 116 point. As per the technical indicators range for the USDINR pair may be 77.40-77.95 levels. Rupee has an immediate support at 77.79 levels. A breach of the same may see rupee at 77.96 followed by 78.82 levels. On the positive side rupee is likely to face resistance at 77.58 levels and if it is able to break the same then it may gain up to 77.45 levels followed by 77.35 levels.

The dollar was up on Tuesday morning in Asia as it continues its fight for a footing. The Chinese Yuan found a floor from its recent drop, however, with investors reducing bets on rising U.S. interest rates leading to further gains for the U.S. currency. The dollar edged from a two-decade high in the week so far and kept losses small in early Asia trade. U.S. bond yields, on the other hand, have pulled back slightly as traders calculate that aggressive near-term interest rate hikes from the U.S. Federal Reserve will drag on long-term U.S. growth. Across the Atlantic, the euro rose about 0.1% on the dollar to $1.0446, and the pound jumped around 1.5% from a two-year hold. The yen is holding above a two-decade low, while the riskier Australian and New Zealand dollars inched up around 0.1% and are off multi-year lows. The Chinese Yuan was steady at 6.7953 per dollar in offshore trade and looked like it was finding a base after falling more than 6% in a month. Shanghai reportedly hitting a milestone of three days of zero community transmission and the city could start easing out of its grueling lockdown. This could help offset Monday’s disappointing economic data. Global interest rate expectations are also becoming more hawkish, with the gap between 10-year German and U.S. real yields narrowing by more than 30 basis points in May 2022 to date. Central banks in the U.K. and Australia have also hiked interest rates. The Reserve Bank of Australia also released the minutes from its latest policy meeting earlier in the day, with G-7 finance ministers and central bankers due to meet a day later. Investors now await speeches from Fed Chairman Jerome Powell and other Fed policymakers later in the day, with Philadelphia Fed President Patrick Harker speaking a day later.