Rupee opened higher, Dollar lower vs. major currencies

Thursday,   23-Mar-2023   10:03 AM (IST)

The Indian rupee opened the day higher at 82.3750/3850 levels compared to its previous close at 82.6550/6650 levels as dollar slips overseas after the U.S. Federal Reserve hiked rates by 25 basis points and signalled it was closer to the end of its tightening cycle amid turmoil in the financial markets. Asian currencies broadly gained against a softer dollar index. Asian equities mixed as Fed warns of a credit crunch affecting U.S. economy due to banking stress. Risk sentiment has not fully rebounded after statement. Indian government bond yields trading lower in early session tracking U.S. peers. Domestic equity markets opened lower as global sentiments turned weaker. At 9:24 AM, the S&P BSE Sensex was trading at 57,946 down 268 point, while the broader Nifty50 was at 17,074 down 78 point. As per the technical indicators range for the USDINR pair may be 82.10-82.70 levels. Rupee has an immediate support at 82.42 levels. A breach of the same may see rupee at 82.66 followed by 82.85 levels. On the positive side rupee is likely to face resistance at 82.25 levels and if it is able to break the same then it may gain up to 82.03 levels followed by 81.86 levels.

The dollar was under pressure near seven-week lows on Thursday as U.S. bond yields fell sharply after the Federal Reserve sounded close to calling time on interest rate hikes. The Fed raised its benchmark funds rate by 25 basis points, as expected, but dropped language about "ongoing increases" being needed in favour of "some additional" rises, as it waits and watches how wobbling confidence in banks affects the economy. Futures imply only an even chance of one more hike. That's a contrast to Europe where markets see another 50 bp or so to go, and the gap sent the euro surging. The dollar pared some of its losses when U.S. Treasury Secretary Janet Yellen set off another round of bank stock selling and jitters over stability by telling Congress she hasn't considered or discussed blanket insurance for deposits. The euro strengthened as much as 1.3% to its highest since early February at $1.0912, though by the Asian morning it had dropped back to bought $1.0872. Sterling also shot to a seven-week high as British inflation unexpectedly rose, leaving it at an eye-watering 10.4% and heaping pressure on the Bank of England to raise rates and sound hawkish at its meeting later in the day. Dollar/yen fell 0.7% overnight and was edging lower in the Asian morning at 131.19. Two-year Treasury yields fell 22 bps on Wednesday. Financial markets have been roiled by wavering confidence in banks globally following a run on Silicon Valley Bank two weeks ago and the sudden demise of Credit Suisse. The risk-sensitive Australian dollar recoiled sharply from a two-week high of $0.6759 to be back at $0.6707 on Thursday morning. The New Zealand dollar also gave up overnight gains, but was firm in morning trade at $0.6238. Sterling bought $1.2282 after rising as high as $1.2334 overnight. Markets have priced a 25bp hike from the BoE. The focus on the banking front is now primarily on U.S. regional lenders where worry of a contagious run on deposits remains elevated. Fed Chair Jerome Powell said deposit flows have stabilised in the last week, and smaller lenders said they took some comfort from Yellen's remarks that deposit insurance would be considered were there to be a contagion risk. Bitcoin fell 3% to $27,360 after a series of U.S. Securities and Exchange Commission lawsuits over crypto promotion put a dampener on digital assets.