Rupee ended higher, Dollar flat vs. major currencies
Wednesday,
07-Dec-2022
04:01 PM (IST)
The Indian rupee ended the session higher at 82.47/48 levels compared to its opening at 82.66/67 levels after touching the high of 82.4150/4250 levels as RBI raised interest rates and took a hawkish stance in its fight against inflation. The RBI raised the key repo rate by 35 basis points (bps) to 6.25%, as widely expected, in its fifth straight increase, and vowed there will be no letup in its fight to tame high inflation. Rupee traded in the range of 82.4150-82.75 levels. Rupee forward premiums will rise from their current decade-low levels as dollar flows resume, Reserve Bank of India Deputy Governor Michael Patra said today. Markets now look ahead to domestic inflation data and the U.S. Federal Reserve meeting, both due next week, to gauge the currency's direction. Indian benchmark bond yield ended higher for a fourth consecutive session today. The benchmark S&P BSE Sensex index ended 216 points, or 0.34%, lower at 62,411. The Nifty50 ended at 18,560.5, down 82 points or 0.44%. In the forward segment 1mth, 3mth and 6mth annualized premia ended the day at 1.86%, 1.77% and 1.87% respectively.
The dollar was little changed on Wednesday after some of the biggest U.S. banks warned of an impending recession, while China's Yuan firmed as authorities loosened some of the country's zero-COVID rules. 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 and high interest rates cut into consumer demand. The greenback was up 0.32% against the Japanese yen following a 0.16% gain on Tuesday. Yet the euro was flat against the dollar at $1.048, after falling 0.2% in the previous session. Investors are weighing up the outlook for the U.S. dollar, which surged this year but has fallen in recent weeks on expectations that the Federal Reserve might soon pause its interest-rate hikes. Some investors believe the recent drop has gone too far and that concerns about the global economy and further Fed rate hikes should boost the currency. Against a basket of currencies, the U.S. dollar index was less than 0.1% higher at 105.55. In Asia, China's Yuan firmed as the government announced measures that marked a sharp change to its tough, three-year-old zero-COVID policy that has battered its economy and sparked historic protests. China's national health authority said asymptomatic COVID-19 cases and those with mild symptoms can self-treat while in quarantine at home. The announcement was the strongest sign so far that China is preparing its people to live with the disease, though analysts say the path to fully reopening the economy will be long and bumpy and not without risk. The onshore Yuan was last up 0.26% at 6.977 per dollar. However, investors were also digesting dismal data which showed China's exports and imports shrank at their steepest pace in at least 2-1/2 years in November. The Aussie was roughly flat at $0.6689 after data showed Australia's economy slowed a little in the September quarter, a day after the country's central bank signalled more rate hikes ahead to cool inflation.
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