Rupee opened higher, Dollar lower vs. Yen

Friday,   27-Jan-2023   10:04 AM (IST)

The Indian rupee opened the day higher at 81.48/49 levels compared to its previous close at 81.59/60 levels as buoyant risk appetite dented demand for the safe haven dollar. Most Asian currencies were trading higher, while equities received a lift from the overnight rally on Wall Street that sent the S&P 500 index to its highest in just under two months. Indian government bond yields trading higher ahead of weekly debt auction. Equity markets edged lower today after over a per cent decline on Wednesday. At 9:20 AM, the S&P BSE Sensex was trading at 59,853 down 352 point, while the broader Nifty50 was at 17,799 down 93 point. As per the technical indicators range for the USDINR pair may be 81.25-81.85 levels. Rupee has an immediate support at 81.67 levels. A breach of the same may see rupee at 81.85 followed by 81.94 levels. On the positive side rupee is likely to face resistance at 81.40 levels and if it is able to break the same then it may gain up to 81.31 levels followed by 81.13 levels.

The U.S. dollar dropped against the yen on Friday as traders bet a hawkish pivot from the Bank of Japan (BOJ) was still in the offing. The dollar also sagged close to a nine-month low versus the euro, amid market expectations the European Central Bank next week will implement a rate hike twice as big as the Federal Reserve's. The U.S. currency dropped 0.43% to 129.65 yen in early trading, after data showed consumer price inflation in Tokyo accelerating to a nearly 42-year peak this month, ramping up pressure on the BOJ to step away from stimulus. However, that was still well away from the 7-1/2-month trough of 127.215 reached last week as expectation built then for the central bank to tweak policy. When BOJ officials voted unanimously on Jan. 18 to keep stimulus settings unchanged, the currency pair bounced as high as 131.58. For the week, the dollar is about flat against the yen, after swinging between gains and losses. By contrast, the euro is headed for a 0.4% rise since last Friday in its third straight winning week. It was 0.07% stronger at $1.08975 on the day, edging back towards the overnight high of $1.09295, a level last seen in April. Traders broadly expect the Fed to increase interest rates by 25 basis points (bps) on Wednesday, a step down from a 50 bps increase in December. Meanwhile, the ECB has all but committed to raising its key rate by half a percentage point on Thursday. The dollar index - which measures the currency against six major peers, including the euro, yen and British pound - edged 0.04% lower to 101.70, putting it on course for a 0.28% decline this week. That would be its third straight weekly slide. Sterling was also set for a third winning week against the greenback, eking out a 0.1% rise. It was flat on Friday at $1.2411. The British currency remains near the seven-month peak of $1.24475 reached at the start of this week, even as traders are still concerned about the task facing the Bank of England in controlling inflation without damaging an economy already in recession. The risk sensitive Aussie dollar rose 0.11% to $0.71225, bringing it closer to Thursday's seven-month high of $0.71425. Australian inflation data earlier in the week showed consumer prices climbing at the fastest pace in 33 years, fostering expectations that more Reserve Bank of Australia interest rate rises are due. For the week, the Aussie is up 2.17%, on track for its biggest weekly advance since early November.