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Rupee opened lower, Dollar higher vs. major currencies

Monday,   15-Apr-2024   10:08 AM (IST)

The Indian rupee opened the day lower at 83.4350/4450 levels compared to its previous close at 83.4125/4225 levels on concerns that rising Middle East tensions could push oil prices higher and sour risk appetite. Fears of a wider conflict grew following Iran's first direct attack on Israel. Asian markets began the week on a nervous note with equities and currencies lower. Indian government bond yields were little changed today with market tracking oil prices for further cues amid geopolitical tensions in the Middle East. Indian shares opened lower as investors sold riskier assets after Iran's retaliatory attack on Israel over the weekend spurred fears of a wider regional conflict. At 9:24 AM, the S&P BSE Sensex was trading at 73,621 down 623 points, while the broader Nifty50 was at 22,336 down 184 points. As per the technical indicators range for the USDINR pair may be 83.30-83.55 levels. Rupee has an immediate support at 83.48 levels. A breach of the same may see rupee at 83.54 followed by 83.60 levels. On the positive side rupee is likely to face resistance at 83.38 levels and if it is able to break the same then it may gain up to 83.31 levels followed by 83.26 levels.

The dollar steadied on Monday, holding its biggest weekly gain since 2022, as escalating conflict in the Middle East and the prospect of stubbornly high U.S. interest rates gave support. The dollar went up 1.6% against a basket of six major currencies last week after a small but unnerving upside surprise in U.S. inflation cast doubt over bets on U.S. rate cuts, while European policymakers signalled a cut within a few months. The dollar made a 34-year high on the yen, rising to 153.69. It made a five-month top on the euro on Friday and traded near those levels early in the Asia day, buying a euro for $1.0646. The initial reaction in currencies seemed to be based more on the receding Federal Reserve rate cut expectations than a weekend attack on Israel by Iran, which caused stock markets, bitcoin and oil to drop. Iran had warned of a strike on Israel and over the weekend launched drones and missiles in retaliation for what it said was an Israeli attack on its Damascus consulate. It caused modest damage and Iran said it now "deemed the matter concluded". Two senior Israeli ministers signalled on Sunday that retaliation was not imminent and that Israel would not act alone, leaving the region on edge over the risk of a broader war, while financial markets were in wait-and-see mode. Investors have slashed bets on Fed cuts and pushed back the start of the easing cycle to September after Wednesday's hotter-than-expected consumer prices (CPI) report. The two-year Treasury yield surged past 5% on Thursday. The yield was last at 4.9%. The euro recorded its biggest weekly percentage drop since late September 2022 last week while sterling had its largest weekly percentage drop since mid-July. The decline in currencies of its trading partners meanwhile pushed the value of China's trade-weighted currency index, opens new tab to a March 2023 high of 100.32, implying it is losing competitiveness.