Rupee ended lower, Dollar firm vs. major currencies

Wednesday,   23-Nov-2022   04:26 PM (IST)

The Indian rupee ended the session lower at 81.8450/8550 levels compared to its opening at 81.7950/8050 levels after touching the low of 81.8550/8650 levels amid cash dollar outflows of a large corporate, while premiums on the local currency declined. Rupee is also weighed down by rising oil prices and the losses in the Chinese Yuan. Cash dollar outflows by a large corporate kept the USD/INR pair well bid. Rupee premiums declined, with the 1-year implied yield falling to 2.10%, near its lowest level in more than a decade. The 1-year implied is down about 30 basis points so far this month. Rupee traded in the range of 81.75-81.8550 levels. India's government bond yields were largely unchanged with market participants avoiding large positions ahead of the minutes of the U.S. Federal Reserve's last meeting, which is due later in the day. The key benchmark indices hovered in the positive zone throughout the trading session, amid mixed cues from the global markets. The S&P BSE Sensex ended 92 points higher at 61,511. The NSE closed with a gain of 23 points at 18,267. In the forward segment 1mth, 3mth and 6mth annualized premia ended the day at 2.37%, 2.23% and 2.31% respectively. 

The U.S. dollar held firm on Wednesday ahead of the release of closely-watched minutes from the Federal Reserve's latest policy meeting, while the New Zealand dollar strengthened on the back of a record rate rise to curb rampant inflation. The U.S. dollar index, which measures the currency against a basket of six counterparts, was broadly flat at 107.1, after shedding 0.65% the previous day amid a pick-up in sentiment that supported riskier currencies. The dollar has broadly rallied against every major currency this year, boosted by supersized rate hikes aimed at curbing price rises, but recent cooler-than-expected inflation data has led investors to rein in bets on future rate increases. Investors will be parsing minutes from the Fed's November meeting, due to be released at 1900 GMT, for any hints about the outlook for rates. The New Zealand dollar gained as much as 0.7%, nearing a three-month high, after the country's central bank lifted interest rates by a record amount despite warning the economy might spend an entire year in recession. The kiwi was last up 0.3% on the day at $0.61715. The Reserve Bank of New Zealand raised its benchmark rate by 75 basis points to 4.25% - the highest of any G10 economy - and said it may need to increase faster than previously indicated. The euro was last up 0.1% at $1.03090, after fresh data showed the downturn in euro zone business activity eased slightly in November. Meanwhile, sterling was broadly unchanged at $1.18915, after a separate survey showed British economic activity fell at its fastest pace in nearly two years in November. In China, a spike in COVID-19 cases has clouded hopes for a reopening of the world's second-largest economy, putting markets on edge. Shanghai abruptly cancelled an auto industry event on Wednesday, while the city of Chengdu plans to conduct mass testing for residents for five straight days.