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Rupee opens lower, Dollar broadly lower

Monday,   03-Oct-2022   09:45 AM (IST)

Rupee opens lower, Dollar broadly lower

Indian rupee opened significantly lower at 81.62/63 levels compared to its previous close of 81.34/35 and swiftly fell even lower in early deals to 81.8125 levels as oil prices surged driven by expectations that OPEC+ will consider cutting output at a meeting this week. Cut in oil production would likely push up inflation further and lead to more aggressive central banks. Concerns over inflation and growth have dampened risk appetite. At 9:20 A.M, the S&P BSE Sensex was trading at 57373.53 down 53 points, while the broader Nifty 50 was at 17086.40 down 7.90 points. Indian government bond yields are trading marginally higher after weaker-than-expected demand at debt auction on Friday and as RBI raised repo rates by 50 basis points, its fourth straight hike in last five months. Traders continue to await any progress towards inclusion of Indian bonds in JPMorgan's emerging market debt index. As per the technical indicators range for the USDINR pair may be 81.40 – 82.00 levels. Rupee has an immediate support at 81.90 levels. A breach of the same may see rupee at 82.05 levels followed by 82.29. On the positive side rupee is likely to face resistance at 81.58 levels and if it is able to break the same then it may gain up to 81.36 levels followed by 81.21 levels.

Dollar slipped against the basket of major currencies after data showed that European inflation hit a record high and U.S. consumer spending increased faster than expected. Data on Friday showed Euro zone inflation zoomed past forecasts to hit 10.0% in September, reinforcing expectations for another jumbo European Central Bank rate hike next month. Consumer spending in U.S increased 0.4% last month after falling 0.2% in July. Further, a reading of core U.S. inflation rose more than expected, suggesting little let up from the Fed on the pace of rate hikes. Elsewhere, the Reserve Bank of Australia and the Reserve Bank of New Zealand meet on Tuesday and Wednesday, respectively, with markets expecting both to lift their cash rate by 50 basis points, though focus will also be on the tone of policymakers. Japan made its first Yen buying intervention since 1998 last week to prop up its currency. It spent a record 2.8 trillion yen ($19.7 billion), Ministry of Finance data showed on Friday, draining nearly 15% of funds it has available for intervention. Oil is trading higher after the news that OPEC+ will consider an oil output cut of more than a million barrels per day at its meeting on October 5, in what would be the biggest move yet since the COVID-19 pandemic to address oil market weakness. Brent is currently trading around $87.50 a barrel.