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Rupee ended higher, Dollar lower vs. major currencies

Thursday,   24-Nov-2022   04:05 PM (IST)

The Indian rupee ended the session higher at 81.63/64 levels compared to its opening at 81.72/73 levels after touching the high of 81.6075/6175 levels as the dollar index tumbled on positive risk sentiment after minutes of the U.S. Federal Reserve's November meeting reaffirmed the likelihood of smaller-sized rate hikes. Rupee traded in the range of 81.6075-81.7775 levels. Risk assets rallied in Asia as the Malaysian ringgit, the Thai baht and the South Korean won surged between 1% to 1.8%, while most stock markets soared. India's bond yields ended lower after minutes of the US Federal Reserve's November meeting signalled a slower pace of rate hikes moving forward. Benchmark indexes rose today driven by a rally in shares of public sector banks and IT companies, with sentiment also getting a boost from signals the U.S. Federal Reserve may slow the pace of interest rate hikes. The S&P BSE Sensex settled at 62,273, higher by 762 points, or 1.24%. The NSE Nifty50 closed at 18,484, up 217 points or 1.19%. In the forward segment 1mth, 3mth and 6mth annualized premia ended the day at 2.34%, 2.25% and 2.33% respectively. 

The U.S. dollar held onto losses on Thursday after the minutes from the Federal Reserve's November meeting supported the view that the central bank would downshift and raise rates in smaller steps from its December meeting. The eagerly awaited readout of the Nov. 1-2 meeting showed officials were largely satisfied they could now move in smaller steps, with a 50 basis point rate rise likely next month after four consecutive 75 basis point increases. The dollar index, which measures the greenback against six major peers, was little changed at 105.93, after sliding 1.1% on Wednesday. The Fed has taken interest rates to levels not seen since 2008 but slightly cooler-than-expected U.S. consumer price data has stoked expectations of a more moderate pace of hikes. Those hopes have seen the dollar index slide 5.1% in November, putting it on track for its worst monthly performance in 12 years. In Europe, the focus was set to turn to the accounts of the European Central Bank's November meeting at 1230 GMT. The euro was up 0.2% at $1.0415, while sterling was last trading at $1.2086, up 0.3% on the day. The pound rallied 1.4% on Wednesday after preliminary British economic activity data beat expectations, although it still showed that a contraction was under way. The euro was up 0.3% against the Swedish krone after Sweden's Riksbank raised rates by 75 basis points, in line with expectations in a Reuters poll. In China, rising coronavirus cases have led cities nationwide to impose more curbs, increasing investor worries about the economy and putting a lid on risk appetite. China reported a record number of infections on Thursday. The Yuan firmed after Chinese state media quoted the cabinet as saying that Beijing will use timely cuts in banks' reserve requirement ratio (RRR), alongside other monetary policy tools, to keep liquidity reasonably ample. The Japanese yen was one of the strongest gainers among major currencies against the dollar, climbing 0.6% to 138.77. The Australian dollar rose 0.2% to $0.6747, while the kiwi was 0.1% higher at $0.6249. U.S. markets will be closed on Thursday for Thanksgiving and liquidity will likely be thinner than usual.