Rupee ended off lows, Euro recovers losses slightly vs. Dollar

Thursday,   16-Mar-2023   04:18 PM (IST)

The Indian rupee ended the session off lows at 82.73/74 levels compared to its opening at 82.78/79 levels after touching the high of 82.61/62 levels as foreign and state-run banks likely sold dollars around the 82.80-level. As per some market players, RBI may have intervened to stem depreciation in the rupee, as the central bank has protected those levels in the past. Rupee traded in the range of 82.61-82.80 levels today. Still, despite the currency's failure to weaken past the 82.80-83 zone, traders added more long positions on USD/INR futures as they expected risk sentiment to remain fragile. Rupee opened lower today and touched the low of 82.80/81 levels early today as concerns over a European lender dented broader risk sentiment, but managed to remain on the stronger side of a past resistance level of 82.80. Rupee premiums rose, with the 1-year yield firming as much as 2.40% to a six-week peak. Asian shares declined, while the Chinese Yuan and the Indonesian rupiah eased on fears of a banking crisis in U.S. and Europe. Indian government bond yields traded unchanged as focus of the market shifted to the Federal Reserve's policy meeting next week after the recent turmoil in U.S. yields. The benchmark indices snapped their five-day losing streak amid high volatility as FMCG and select banking shares gained, while IT and metal stocks witnessed selling pressure. The S&P BSE Sensex settled with a gain of 79 points at 57,635. The NSE Nifty 50 ended the day 13 points higher at 16,986. In the forward segment 1mth, 3mth and 6mth annualized premia ended the day at 2.76%, 2.47% and 2.36% respectively.

The euro and Swiss franc regained some lost ground on Thursday, as markets reacted positively to the Swiss central bank's support for Credit Suisse, ahead of a difficult meeting for ECB rate setters. The euro was up 0.4% at $1.06225 having lost 1.4% a day earlier, its biggest percentage fall in six months, as the focus of fears about the banking sector spread across the Atlantic from the collapsed U.S.-based Silicon Valley Bank to the much larger Credit Suisse. Some calm was restored to markets after the Swiss lender said on Thursday it would borrow up to $54 billion from the Swiss National Bank to shore up liquidity and investor confidence, after its shares on Wednesday plunged as much as 30%. That helped the Swiss franc to strengthen, and the dollar dipped 0.92% against the franc, to 0.9248, reversing some of its 2.15% surge on Wednesday - the largest daily gain since 2015. In what would have been the day's main event before the banking sector ructions, the European Central Bank (ECB) meets to set interest rates later on Thursday, with a decision due at 2.15 p.m. CET (1315 GMT). The central bank had all but committed to a 50 basis point hike at this meeting at its previous meeting in February, but recent market turmoil has thrown such expectations into question. Pricing in derivatives markets currently indicates roughly a 50% chance of a 50-basis-point hike, an increase from earlier in the week. Elsewhere, the safe-haven Japanese yen remained in favour even as markets calmed a little.