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Rupee ended lower, Dollar higher vs, major currencies

Thursday,   28-Mar-2024   04:21 PM (IST)

The Indian rupee ended the session lower at intraday low of 83.40/41 levels compared to its opening at 83.3175/3275 levels pressured by weak Asian peers and strong dollar demand from local companies, but likely intervention from RBI limited losses. Rupee traded in a range of 83.3150-83.40 level today. The RBI likely sold dollars via state-run banks to prevent further losses in rupee. Most Asian currencies were lower with the Thai baht, down 0.3%, leading losses. Indian government bond yields were down as the government's planned borrowing from the market in the first half was sharply lower than estimated, lifting investor sentiment. Indian shares advanced today to close the fiscal year with weekly and quarterly gains in a holiday-shortened week, led by financials after the central bank eased recently tightened rules for lenders' investments in alternative investment funds. The blue-chip NSE Nifty 50 index rose 0.92% to 22,326.90, while the BSE Sensex settled 0.90% higher at 73,651.35. In the forward segment 1mth, 3mth and 6mth annualized premia ended the day at 0.97%, 1.09% and 1.28% respectively.

The dollar gained on the euro and pound on Thursday after a U.S. Federal Reserve policy maker said he wasn't in a hurry to cut rates, while traders braced for key economic data and hesitated to move on the yen on fears of Japanese intervention. The Japanese currency was steady at 151.42 per dollar having traded just shy of the 152 mark at its lowest since 1990 on Wednesday before Japan's top monetary officials suggested they were ready to intervene to prevent further declines. Speaking during late U.S. trading hours on Wednesday, Fed Governor Christopher Waller said recent disappointing inflation data affirms the case for the U.S. central bank holding off on cutting its short-term interest rate target. Market expectations for the first rate cut to occur at the Fed's June meeting have eased somewhat. Current pricing has it at a 60% chance, compared to 67% around this time last week, according to the CME FedWatch tool. Traders now await U.S. core PCE inflation figures due on Friday, as well as an appearance by Fed Chair Jerome Powell. Should the inflation data surprise on the upside and support the dollar, its most dramatic impact could be on the yen. Market participants say there is a dense thicket of options restricting moves in dollar/yen around the 152 level, and so a break through could trigger more significant moves. Japanese authorities held a meeting on Wednesday on the currency's weakness and ramped up their verbal warnings, putting the market on the lookout for any signs that words are being backed up with action. Japan intervened in the currency market three times in 2022, selling the dollar to buy yen, first in September and again in October as the yen slid towards a 32-year low of 152 to the dollar. A summary of opinions at the Bank of Japan's March meeting released on Thursday gave the currency little support, showing many policymakers saw the need to go slow in phasing out ultra-loose monetary policy. The Easter holiday in many markets is also complicating matters. Meanwhile, China's central bank set the yuan fixing at the widest gap against Reuters' estimate in nearly five months, as authorities step up efforts to prevent sharp declines in the currency. The yuan slumped to a four-month low last Friday.