Rupee ended higher, Dollar lower vs. major currencies

Tuesday,   17-May-2022   04:06 PM (IST)

The Indian rupee ended the session higher at 77.5650/5750 levels compared to its opening at 77.69/70 levels after touching the high of 77.54/55 levels on dollar sales by state-run banks, likely on behalf of the Reserve Bank of India, and foreign-currency supplies from exporters. The rupee plunged to an all-time low of 77.7975/8075 levels today amid a broader advance by most major regional currencies except the Indonesian rupiah, on concerns about the risk of a spike in volatility in global oil prices from the fallout of the prolonged conflict in Ukraine. Brent crude futures topped $115 a barrel, its highest since late March, even as Hungary pushed back against the European Union’s proposal for an embargo on import of oil from Russia, which invaded Ukraine in February. Asian equity markets were broadly higher today. India’s wholesale inflation quickened to an annual 15.08% in April, the fastest pace since at least April 2005, driven by higher prices of food and fuel, government data showed today. Indian federal government bond yields ended higher for the third consecutive session as bearish sentiment worsened with elevated oil prices putting further pressure on the country's inflation outlook. The BSE benchmark surged 1,345 points, or 2.54 per cent, to settle at 54,318, while the broader Nifty50 gained 417 points, or 2.63 per cent, to end at 16,259. In the forward segment 1mth, 3mth and 6mth annualized premia ended the day at 3.43%, 3.35% and 3.44% respectively.

The dollar eased for a third straight day on Tuesday as investors cautiously trimmed bets on a rally which sent the greenback to a two-decade high last week. The currency’s strength is widely expected to remain a driving force across financial markets in 2022 as the U.S. Federal Reserve implements a new cycle of monetary tightening. Fed speakers on Tuesday, including Chairman Jerome Powell at 1800 GMT, will be closely watched for any clues about whether near-term rate expectations could become even more aggressive. The U.S. currency’s breather pushed the dollar index down 0.39% to 103.76, more than 1% below last week’s two-decade high of 105.010. Data showed consumption and factory output in world’s second biggest economy fell in April at a pace unseen since early 2020, when the Wuhan coronavirus outbreak became a pandemic. The Chinese offshore Yuan gained 0.6% after a steep slide that has knocked it about 7% lower since mid-April. It last traded at 6.7556 per dollar. Shanghai logged three consecutive days with no new COVID-19 cases outside quarantine zones on Tuesday, a milestone that in other cities has signalled the beginning of lifting restrictions. The euro rose 0.4% to $1.0476 a day after European Central Bank policymaker Francois Villeroy de Galhau said a weak euro threatened price stability in the currency bloc. Worries that escalating tensions with Russia could lead to a gas embargo, a recession in the euro zone and prevent the ECB from lifting interest rates are however weighing on the common currency’s prospects. The Australian dollar jumped 0.8% to $0.70305, recovering further from a two-year low touched last week, and could get an extra boost from interest rate expectations if wage data beats expectations on Wednesday. Australia’s central bank considered a sharper rise in interest rates at its May meeting, minutes published on Tuesday showed, in a heavy hint it will hike again in June. The yen was 0.24% lower at 129.41 per dollar, holding above a two-decade trough while Sterling jumped 1.2% to $1.2469.