Rupee opened higher, Dollar higher vs. major currencies

Tuesday,   02-Apr-2024   09:55 AM (IST)

The Indian rupee opened the day higher at 83.37/38 levels compared to its previous close at 83.40/41 levels on RBI intervention expectations. There were likely dollar sales by exporters in early deals. The rupee is under pressure as the U.S. Treasury yields surged and the dollar index climbed past 105 for the first time since November. Robust U.S. manufacturing data pushed the dollar index to its highest level in more than four months. Indian government bond yields start the new financial year with an uptick, as U.S. bond yields rise. Indian shares were muted at the open after hitting record highs in the previous session, as high-weightage financials took a breather after a three-session rally, while IT stocks dropped after U.S. data added to worries of a delay in rate cuts. At 9:29 AM, the S&P BSE Sensex was trading at 73,923 down 92 points, while the broader Nifty50 was at 22,452 down 10 points. As per the technical indicators range for the USDINR pair may be 83.20-83.50 levels. Rupee has an immediate support at 83.43 levels. A breach of the same may see rupee at 83.48 followed by 83.56 levels. On the positive side rupee is likely to face resistance at 83.31 levels and if it is able to break the same then it may gain up to 83.25 levels followed by 83.19 levels.

The U.S. dollar hovered near a 4-1/2-month high against major peers on Tuesday as traders rushed to push back bets for the Federal Reserve's first interest rate cut this year. The dollar held close to a six-week peak versus the euro and sterling reached on Monday, after U.S. data unexpectedly showed the first expansion in manufacturing since September 2022. Fears of intervention by Japanese officials limited dollar gains against the yen, even as long-term U.S. Treasury yields - which the currency pair tends to track - jumped more than 14 basis points to a two-week top at 4.337% overnight. Gold, which performs best when yields are falling, was knocked back from a record peak. The U.S. rate futures market now factors in 61.3% odds of a Fed rate cut in June, down from about 70.1% probability a week ago, according to the CME's FedWatch tool. The Japanese yen firmed slightly on Tuesday to 151.565 per dollar, after dipping to 151.77 the previous day. It reached a 34-year trough of 151.975 last week, spurring Japan to step up warnings of intervention. On Tuesday, Finance Minister Shunichi Suzuki reiterated that he wouldn't rule out any options to respond to disorderly currency moves. Japanese authorities intervened in 2022 when the yen slid toward a 32-year low of 152 to the dollar. The yen's slide has come despite the Bank of Japan's first interest rate hike since 2007 last month, with officials cautious about further tightening amid a fragile exit from decades of deflation.