Rupee ended lower, Dollar edges up vs. major currencies
Thursday,
08-Dec-2022
04:06 PM (IST)
The Indian rupee ended the session lower at 82.42/43 levels compared to its opening at 82.27/28 levels after touching the low of 82.47/48 levels due to weakness in the broader markets over worries of a slowdown in developed economies. Rupee had opened higher today following gains from softer crude prices and a sombre dollar. State-run banks were seen bidding for dollars on behalf of oil marketing companies through the session as crude slumped. Rupee traded in the range of 82.27-82.47 levels. The rupee was sold heavily ahead of the Reserve Bank of India's (RBI) decision on Wednesday, but has found some stability after the central bank hiked rates and took a hawkish stance. An overnight drop in U.S. yields and oil prices helped the currency, but the mood was tempered on concerns over higher interest rates sparking a recession in the United States and other developed economies. Asian currencies closed between marginally weak to slightly higher, while global equities mostly declined. The Chinese Yuan and shares fell, even as COVID rules were relaxed in the country. USD/INR premiums were unchanged from Wednesday, with the 1-year forward implied yield holding the 1.76% level it jumped to after RBI's monetary policy decision. Indian government bond yields ended higher for a fifth consecutive session, as sentiment remains cautious after a hawkish monetary policy and traders await fresh supply of debt through a weekly auction on Friday. The S&P BSE Sensex closed at 62,571, up 160 points or 0.26%. The NSE Nifty closed 49 points, or 0.26%, higher at 18,609. In the forward segment 1mth, 3mth and 6mth annualized premia ended the day at 1.82%, 1.83% and 1.92% respectively.
The dollar edged up on Thursday, supported by a push higher in U.S. Treasury yields, as investors weighed the outlook for Federal Reserve policy against the chances that high interest rates could lead to a recession. Next week brings a raft of major central bank decisions, including those from the Federal Reserve, the European Central Bank and the Bank of England. The key question for traders and investors is whether inflation has reached a peak, giving policymakers more scope to deliver smaller interest-rate rises over the coming months. U.S. monthly consumer inflation is also due next week, one day before the Fed's policy meeting on Dec. 14, and could be pivotal in setting longer-term expectations for monetary policy. The dollar was broadly steady against a range of major currencies. The euro was last flat against the greenback at $1.0493, while the pound eased to $1.2171. The yen, which is highly sensitive to shifts in U.S. Treasury yields, fell 0.25% to 136.90, surrendering some of Wednesday's 0.4% gain. The yield on the 10-year Treasury has fallen almost continuously since hitting a 15-year high in late October, having shed almost a full percentage point. In fact, it's unwound around half the rise that took place between August's four-month lows and October's peak around 4.34%. Meanwhile, oil prices have fallen below $80 a barrel for the first time since Russia invaded Ukraine in late February, as concern has mounted about how much a slowing economy will impact global energy demand. Meanwhile, the Yuan hovered close to an almost three-month high after China announced another loosening in some of its highly restrictive COVID restrictions. The U.S. dollar edged 0.1% higher to 6.9670 Yuan in offshore trading, clawing back some of its 0.34% decline from Wednesday, when the Chinese government announced a relaxation of some COVID-19 measures that have badly hampered the economy.
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