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Rupee opened lower, Dollar higher vs. major currencies

Thursday,   25-May-2023   09:56 AM (IST)

The Indian rupee opened lower at 82.7550/7650 levels compared to its previous close at 82.66/67 levels as worries over the U.S. debt ceiling boosted demand for the safe haven dollar and sent U.S. yields higher. U.S. equities dropped overnight. Asian currencies fell with the offshore Chinese Yuan dropping below 7.08 to the dollar. Indian government bond yields rise, with benchmark back above 7%, amid constant rise in U.S. yields. Indian shares opened lower tracking a slide in global equities as U.S. debt ceiling negotiations continued with no resolution in sight and weighed on sentiment. At 9:24 AM, the S&P BSE Sensex was trading at 61,802 up 28 point, while the broader Nifty50 was at 18,299 up 14 point. As per the technical indicators range for the USDINR pair may be 82.60-83.00 levels. Rupee has an immediate support at 82.83 levels. A breach of the same may see rupee at 82.91 followed by 83.05 levels. On the positive side rupee is likely to face resistance at 82.64 levels and if it is able to break the same then it may gain up to 82.53 levels followed by 82.42 levels.

The dollar pushed to a two-month high against the euro and a six-month peak versus the yen on Thursday, as a resilient U.S. economy led traders to pare their bets on rate cuts this year. The greenback has also benefited from demand for safe havens, paradoxically as a U.S. debt ceiling impasse threatens a disastrous default as soon as June 1, when the Treasury has warned it would be unable to pay all its bills. The dollar touched $1.07425 per euro early in the Asian session for the first time since March 24, and remained elevated to last trade at $1.0748. The dollar also bought 139.66 yen, a level last seen on Nov. 30. With only a week left until the "X-date" for a debt ceiling resolution, and a divided Congress also needing several days to pass legislation, investors are becoming increasingly jittery. Fitch put the United States' "AAA" debt ratings on negative watch on Wednesday, adding to the sense of imminent crisis. The U.S. dollar index, which measures the currency against six major peers including the euro and yen, touched a two-month high of 104.01. The latest sign of weakness out of Europe came from a worse-than-expected deterioration in German business confidence. Meanwhile, the Chinese Yuan renewed a six-month low by dropping to 7.0827 per dollar in the offshore market. The Asian giant has seen a cascade of disappointing economic indicators, all pointing to dull consumer demand and suggesting a post-pandemic recovery has already run its course. Australia's dollar has felt the impact of that China weakness acutely because of its close trade ties, edging to a fresh 6 1/2-month low of $0.6527. The New Zealand dollar was still reeling from the central bank's shock dovish tilt on Wednesday, which triggered a 2.2% slide. On Thursday, it pushed to the lowest since mid-November at $0.6085. The U.S. economy's resilience in the face of the Federal Reserve's aggressive tightening campaign has trimmed expectations for rate cuts this year to just a quarter point in December, from as much as 75 basis points previously. Money markets ramped back up the odds to about 1-in-3 for another quarter-point hike in June, with several Fed officials striking a hawkish posture recently with consumer inflation still running about twice the 2% target.