Rupee gains after opening lower, Dollar up vs. major currencies

Wednesday,   07-Dec-2022   09:46 AM (IST)

The Indian rupee opened the day lower at 82.66/67 levels compared to its previous close at 82.6150/6250 levels on likely dollar buying by importers. However, overnight fall in oil prices capped the fall in rupee. Corporate dollar outflows and the culling of long rupee positions were cited as reasons for the rupee's fall and the pickup in intraday volatility. Asian currencies are mostly flat to weaker. Asian shares incurred moderate losses while U.S. equity futures were little changed. Indian government bond yields open lower tracking slump in oil prices. The RBI decision, due at 10 a.m. is widely expected to be a 35-basis point (bps) rate hike, as inflation continues to stay above the central bank's tolerance band, with its outlook on growth and prices considered crucial. Equity markets opened nearly unchanged as investors remained cautious ahead of the Reserve Bank of India's monetary policy decision. At 9:24 AM, the S&P BSE Sensex was trading at 62,568 down 58 point, while the broader Nifty50 was at 18,632 down 10 point. As per the technical indicators range for the USDINR pair may be 82.00-83.00 levels. Rupee has an immediate support at 82.85 levels. A breach of the same may see rupee at 83.00 followed by 83.20 levels. On the positive side rupee is likely to face resistance at 82.45 levels and if it is able to break the same then it may gain up to 82.28 levels followed by 81.74 levels.

The dollar crept higher on Wednesday as top executives from the biggest U.S. banks warned of an impending recession, which dampened risk appetite and kept the greenback supported. Top bankers from JPMorgan Chase & Co, Bank of America and Goldman Sachs said overnight that the banks are bracing for a worsening economy next year, as inflation threatens consumer demand. Against the dollar, sterling fell 0.4% overnight, and was last 0.05% lower at $1.2128. The greenback rose 0.16% overnight against the Japanese yen, but erased some of those gains in early Asia trade and fell 0.04% to 136.97 yen. Against a basket of currencies, the U.S. dollar index was last 0.05% higher at 105.60. It had risen nearly 0.3% overnight, extending a brief rally for a second straight session after upbeat U.S. services and factory data released at the start of the week pointed to underlying momentum in the world’s largest economy. This supported the view that while the Federal Reserve may scale back the pace of its rate hikes, U.S. rates will remain higher for longer. Elsewhere, the euro was last 0.13% lower at $1.0460. Two European Central Bank (ECB) officials had signalled that inflation and rates may be close to peaking, ahead of the ECB’s monetary policy meeting next week. The Aussie was last 0.16% higher at $0.6699, after a muted reaction following data release of its gross domestic product on Wednesday, which showed that Australia’s economy slowed a little in the September quarter. The antipodean currency remained buoyed by a hawkish stance from the Reserve Bank of Australia, which on Tuesday signalled more rate hikes ahead to cool inflation, after it lifted its cash rate by 25 basis points to a 10-year high. The kiwi edged 0.02% lower to $0.6317. In Asia, China’s November trade data is also due on Wednesday, and is expected to show a further contraction in the country’s exports and imports. The offshore Yuan was last marginally higher at 6.9845 per dollar, having been supported by an easing of China’s strictest COVID-19 restrictions. The country may announce 10 new COVID-19 easing measures as early as Wednesday, two sources with knowledge of the matter told Reuters.