Rupee ended lower, Dollar lower vs. major currencies

Thursday,   11-Aug-2022   04:08 PM (IST)

The Indian rupee ended the session lower at 79.6350/6450 levels compared to its opening at 79.24/25 levels after touching the low of 79.69/70 levels amid dollar demand from speculators and importers as Fed policymakers indicated that additional work was needed to fully contain inflation. Gain in oil prices also weighed on rupee. Rupee traded in the range of 79.22-79.69 levels today. USD/INR forward premiums rose, tracking a fall in Treasury yields following U.S. inflation data. Rupee opened higher today as a decline in the U.S. inflation rate boosted Asian currencies, lifting risk appetite. Indian government bond yields fell for a second consecutive session on Thursday, spurred by hopes of easing inflation and a slower pace of interest rate hikes from the Reserve Bank of India. Benchmark indices ended higher. The S&P BSE Sensex surged 515 points, or 0.88 per cent, to end at 59,333. The Nifty50 advanced 124 points, or 0.71 per cent, to settle at 17,659. In the forward segment 1mth, 3mth and 6mth annualized premia ended the day at 3.07%, 3.07% and 2.95% respectively.

The dollar lost further ground versus other major currencies on Thursday, after traders reined in bets on an aggressive interest rate hike by the Federal Reserve after softer-than-expected U.S. inflation data the previous day. The dollar index remained on the back foot in early European trading hours, slipping 0.2% to 105.010, after recording its biggest daily fall in five months, of 1%, the previous day. Data on Wednesday showed U.S. consumer prices were unchanged in July, month on month, after advancing 1.3% in June. Traders pared bets the Fed would raise rates by 75 basis points for a third straight time at its September policy meeting, and now see a half-point increase as the more likely option. Fed policymakers sought to temper any expectations of significantly looser policy, with Neal Kashkari telling a conference on Wednesday that the central bank was “far, far away from declaring victory” on inflation. The euro and Japanese yen were among the currencies to benefit from the dollar’s weakness and both added to the previous day’s gains. The euro was last up a quarter of a percent at $1.03255. The yen gained 0.2% to 132.615 yen per dollar. Sterling was broadly flat versus the dollar at $1.22250, after gaining more than 1% the previous day.