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Rupee ended lower, Dollar steady vs. major currencies

Tuesday,   30-May-2023   04:20 PM (IST)

The Indian rupee ended the session lower at 82.71/72 levels compared to its opening at 82.65/66 levels after touching the high of 82.7850/7950 levels weighed by a broad strength in the U.S. dollar and associated weakness in the Chinese Yuan. Rupee traded in the range of 82.65-82.7850 levels today. The Chinese Yuan continued to decline, falling past the 7.10-level for the first time since November last year, on worries over China's economic recovery and a hawkish outlook from the U.S. Federal Reserve. Yuan's weakness and some possible buying from government companies is supporting the USD/INR. Meanwhile, the 1-year rupee forward premium was little changed at 1.77%, hovering near its lowest level this year. Investors will now focus on the U.S. jobs data due on Friday and the country's inflation numbers, ahead of the Fed meeting on June 13-14. Indian government bond yields were down tracking fall in U.S. yields. Indian shares rose today aided by gains in fast moving consumer goods (FMCG) and high-weightage financials, on improved global cues after U.S. lawmakers reached a tentative debt ceiling deal over the weekend. The blue-chip Nifty 50 index closed 0.19% higher at 18,633.85, while the benchmark S&P BSE Sensex gained 0.20% to 62,969.13. In the forward segment 1mth, 3mth and 6mth annualized premia ended the day at 1.37%, 1.39% and 1.48% respectively.

The U.S. dollar steadied after climbing to a two-month high and European stocks flattened on Tuesday as relief that a possible default by the U.S. government had been averted gave way to concern that the deal could face a rocky path through Congress. The U.S. dollar index and longer-dated U.S. Treasuries rallied as traders welcomed the deal to suspend Washington's borrowing limit until January 2025 in exchange for caps on spending and cuts in government programmes. The yen softened slightly against the dollar on Tuesday after Japan's top finance diplomat Masato Kanda said authorities were closely watching foreign exchange market moves, would "respond appropriately", but were not focussing on particular levels. The dollar was last up 0.12% on the day at 140.61 yen, having traded slightly lower immediately before Kanda's remarks. Kanda was speaking after a meeting involving top officials from the Ministry of Finance, Bank of Japan and the financial watchdog. The dollar had hit a six-month high at 140.93 before the meeting was convened. Elsewhere, China's onshore Yuan eased to as soft as 7.0995 per dollar after China's central bank set the fixing at the Yuan’s weakest level since December. The offshore Yuan also weakened past a key level of 7.1 per dollar. The Turkish lira slipped further and weakened to a record low after President Tayyip Erdogan secured victory in the country's presidential election on Sunday.