Rupee opened lower, Dollar higher vs. major currencies

Thursday,   16-Mar-2023   09:55 AM (IST)

The Indian rupee opened the day lower at 82.78/79 levels compared to its previous close at 82.5950/6050 levels as concerns over the failure of Silicon Valley Bank and the slump in the shares of Credit Suisse boosted demand for the safe-haven currency. The rout in its shares prompted the Swiss National Bank to throw a financial lifeline. Near-maturity European and U.S. bond yields plunged on Wednesday, and the dollar index jumped. Risk appetite, already impacted by collapse of Silicon Valley Bank, worsens on turmoil at Credit Suisse. Asian shares and currencies are mostly lower. Indian government bond yields are lower today tracking U.S. peers. Domestic equity markets opened lower amid mixed global cues. At 9:23 AM, the S&P BSE Sensex was trading at 57,449 down 111 point, while the broader Nifty50 was at 16,932 down 40 point. As per the technical indicators range for the USDINR pair may be 82.50-83.20 levels. Rupee has an immediate support at 82.93 levels. A breach of the same may see rupee at 83.09 followed by 83.35 levels. On the positive side rupee is likely to face resistance at 82.59 levels and if it is able to break the same then it may gain up to 82.45 levels followed by 82.25 levels.

Safe haven currencies like the U.S. dollar and the yen were in bid on Thursday on renewed fears of a global banking crisis, after contagion from the implosion of U.S.-based Silicon Valley Bank had spread across the Atlantic to Swiss bank Credit Suisse. In the latest blow to investors' confidence in the financial sector, Credit Suisse's shares on Wednesday plunged as much as 30%, after its largest shareholder said it could not provide further support to the bank. The rout in its shares prompted the Swiss National Bank to throw a financial lifeline to the embattled lender, in an unprecedented move by a central bank, and Credit Suisse announced in early Asia trade on Thursday it would borrow up to 50 billion Swiss francs ($54 billion) from the bank. Traders flocked to traditional safe haven currencies, boosting the dollar and the Japanese yen, on mounting worries that the recent stress unfolding across banks in the U.S. and Europe could be a harbinger of a widespread systemic crisis. Credit Suisse, which is battling to recover from a string of scandals that have undermined the confidence of investors and clients, was the latest casualty to be caught up in a crisis of confidence after the collapse of SVB last week. SVB's shutdown on Friday, followed two days later by the collapse of Signature Bank, forced U.S. President Joe Biden to rush out assurances the financial system was safe and prompted emergency U.S. measures giving banks access to more funding. Investors remain on tenterhooks as they await further clarity on how widespread the fallout could be, with rescue measures from authorities doing little to soothe heightened fears thus far. Focus also turns to how central banks will navigate their paths on future rate hikes, with policymakers left in a bind on how much further they should raise rates to stem inflation without triggering a financial sector shakeout. The European Central Bank meets later on Thursday and is due to announce its interest rate decision following the meeting. Traders' bets on a 50-basis-point rate hike have evaporated quickly as the rout in Credit Suisse shares fanned concerns about the health of Europe's banking sector. Two supervisory sources told Reuters that the ECB has contacted banks on its watch to quiz them on their exposure to Credit Suisse. Elsewhere, the risk-sensitive Australian and New Zealand dollars were struggling to make headway after having slid close to 1% each on Wednesday.