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Rupee ended slightly lower, Dollar higher vs, major currencies

Tuesday,   02-Apr-2024   04:10 PM (IST)

The Indian rupee ended the session slightly lower at 83.3850/3950 levels compared to its opening at 83.37/38 levels due to weakness in Asian currencies. Rupee had opened higher today and hovered in a tight band of 83.3450-83.3950 level today on the back of dollar sales by exporters. The rupee saw "sideways price action" through much of the session amid relatively muted trading volumes. Asian currencies declined, with the Malaysian ringgit down 0.5% and leading losses. The dollar index was steady near 105 after rising over 0.4% on Monday, boosted by stronger-than-expected economic data. Meanwhile, open interest on dollar-rupee April month futures fell after brokers informed their clients of an RBI notification that would require that positions in rupee contracts can only be taken against contracted exposures. The notification, due to come into effect on April 5, is expected to significantly drive down volumes in the segment, Reuters reported earlier on Tuesday. Indian government bond yields were up tracking spike in U.S. yields. Benchmark indices took a breather on Tuesday weighed by profit booking in heavyweights like ICICI Bank, L&T, Infosys, Kotak Bank, Bharti Airtel, TCS, HCL tech, Axis Bank, and Sun Pharmaceuticals. The S&P BSE Sensex ended at 73,904, down 111 points or 0.15%. The Nifty50 ended near 22,450 at 22,453, down 9 points or 0.04%. In the forward segment 1mth, 3mth and 6mth annualized premia ended the day at 1.14%, 1.10% and 1.30% respectively.

The U.S. dollar hit its highest in almost five months on Tuesday as stronger-than-expected economic data caused investors to cut their bets on a June rate cut, boosting the currency. Fears of intervention by Japanese officials slowed the dollar's gains against the yen, however, even as long-term U.S. Treasury yields - which the currency pair tends to track - jumped to a two-week top overnight. The dollar index rose to 105.1 on Tuesday, its highest level since Nov. 14, adding to sharp gains on Monday after U.S. data unexpectedly showed the first expansion in manufacturing since September 2022. It last stood at 105, unchanged from Monday. The euro fell to its lowest since mid-February and was not far off its November lows, trading down slightly at $1.0732. Data on Tuesday showed that the euro zone factory downturn deepened again in March. Sterling was little changed at the bottom end of its recent range and near its lowest since December at $1.2558. Monday's U.S. ISM manufacturing survey data also showed a sharp rise in a measure of prices in the sector, adding to investors' concerns that inflation will be slow to fall back to 2%, delaying the Federal Reserve's first rate cut. Fed Chair Jerome Powell on Friday said the central bank was in no hurry to lower borrowing costs after data showed a key measure of inflation rose slightly in February. The Japanese yen was last flat at 151.58, after earlier dipping to 151.79. It has traded in a tight range since reaching a 34-year trough of 151.975 on Wednesday, which spurred Japan to step up warnings of intervention. On Tuesday, Finance Minister Shunichi Suzuki reiterated that he would not 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 decline 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.