Rupee opened lower, Dollar lower vs. major currencies

Tuesday,   24-Jan-2023   10:02 AM (IST)

The Indian rupee opened the day lower at 81.50/51 levels compared to its previous close at 81.39/40 levels on expectations that the central bank will not allow rupee to appreciate much from current levels. Elevated oil prices and gently rising U.S. yields also limits rupee gains. Asian currencies are range bound and shares are higher. Indian government bond yields were marginally higher in early trade today ahead of state debt sale. Equities started higher as firm global sentiment swept the domestic markets. At 9:20 AM, the S&P BSE Sensex was trading at 61,124 up 182 point, while the broader Nifty50 was at 18,169 up 51 point. As per the technical indicators range for the USDINR pair may be 81.40-82.00 levels. Rupee has an immediate support at 81.76 levels. A breach of the same may see rupee at 81.94 followed by 82.20 levels. On the positive side rupee is likely to face resistance at 81.48 levels and if it is able to break the same then it may gain up to 81.25 levels followed by 81.00 levels.

The dollar was on the back foot on Tuesday, hovering near a nine-month low to the euro and giving back recent gains against the yen, as traders continued to gauge the risks of a U.S. recession and the path for Federal Reserve policy. Europe's single currency was buoyed on Monday by comments from European Central Bank officials pointing to aggressive policy tightening. The U.S. dollar index - which measures the greenback against a basket of six peers, including the euro and yen - slipped 0.09% to 101.92, heading back towards the 7-1/2-month low of 101.51 reached on Wednesday. The euro added 0.08% to $1.0879, taking it closer to Monday's peak of $1.0927, the strongest since April. Money market traders see only two more quarter point rate hikes by the Fed to a peak of around 5% by June, with two quarter point cuts following before year-end. The Fed itself has insisted 75 basis points of more tightening is likely on the way. Elsewhere, the dollar sank 0.36% to 130.19 yen, retreating after two sessions of strong gains. The dollar-yen pair declined to as low as 127.215, the weakest since May, in the run-up to the Bank of Japan's policy review last week amid rising bets for an end to stimulus. However, the central bank stood its ground and kept policy unchanged, giving the dollar some respite. Many, though, continue to expect a hawkish shift by the BOJ this year, as policymakers continue to tweak policy in order to extend the life of the yield curve control (YCC) mechanism, which pins short-term rates at -0.1% and keeps 10-year yields in a band around zero. Meanwhile, sterling was last trading at $1.2388, up 0.12% on the day. The Australian dollar rose 0.21% to $0.704 and the New Zealand dollar advanced 0.26% to $0.650.