Rupee opened at record low, Dollar higher vs. major currencies

Tuesday,   16-Apr-2024   09:59 AM (IST)

The Indian rupee opened the day at a record low of 83.51/52 levels compared to its previous close at 83.45/46 levels tracking losses in Asian peers on concerns over a wider Middle East conflict and expectations that the Federal Reserve will wait longer to cut interest rates. However, RBI is likely selling dollars via state-run banks to curb the rupee's losses. The dollar index was at its highest in nearly six months. Asian currencies dropped, with the Korean won and the Indonesian rupiah leading the way. Indian government bond yields rise to near three-month highs in early trade today amid heightened tensions in the Middle East. Indian shares opened lower today as a slide in information technology stocks on receding bets of early U.S. rate cuts added to investors' concerns over the conflict in the Middle East. At 9:31 AM, the S&P BSE Sensex was trading at 73,000 down 400 points, while the broader Nifty50 was at 22,171 down 101 points. As per the technical indicators range for the USDINR pair may be 83.35-83.60 levels. Rupee has an immediate support at 83.56 levels. A breach of the same may see rupee at 83.62 followed by 83.67 levels. On the positive side rupee is likely to face resistance at 83.43 levels and if it is able to break the same then it may gain up to 83.38 levels followed by 83.32 levels.

The dollar hit a five-month high against major peer currencies on Tuesday following hotter-than-expected U.S. retail sales figures, raising intervention worries as the yen languished at its lowest level since 1990. The Chinese yuan stabilised after touching its lowest since November in early Asia trading after GDP data for China's first quarter beat expectations, a boost for policymakers trying to shore up confidence in the face of a protracted property crisis. U.S. data on Monday showed retail sales rose 0.7% last month, compared with a 0.3% rise that economists polled by Reuters had forecast. Data for February was revised higher to show sales rebounding 0.9% for the largest gain in just over a year, much stronger than the previously reported 0.6%. The latest data has raised more questions about when the Federal Reserve could begin cutting interest rates, following robust employment gains in March and a pick-up in consumer inflation. Markets are now pricing in a 41% chance of the Fed cutting rates in July, compared with around 50% before the data, according to CME FedWatch tool. The likelihood of the first cut coming in September has bumped up to nearly 46%. Underlining the market bets, the president of the San Francisco Federal Reserve Bank, Mary Daly, said late on Monday in the United States that there is "no urgency" to cut U.S. interest rates. The U.S. dollar index touched 106.37 on Tuesday, the highest since Nov. 2. In the face of dollar strength, the yen breached 154 per dollar to hit its weakest level in 34 years. That kept traders on high alert for yen-buying intervention from Japanese authorities. With hedge funds building up their largest bets against the currency in 17 years, a rebound in the yen could trigger a significant rally. In Tokyo, Japanese Finance Minister Shunichi Suzuki said on Tuesday he was closely watching currency moves and will take a "thorough response as needed", after the dollar hit a 34-year high. The yen last hovered around 154.40 per dollar, close to the new resistance level of 155. The offshore Chinese yuan fell to 7.2831 per dollar for its lowest mark since Nov. 14, before picking up after official data showed China's economy grew 5.3% in the first quarter year-on-year, comfortably beating analysts' expectations. But China's retail sales missed expectations, a worrying sign for consumer confidence and reflection of the economy's uneven recovery. Elsewhere, the euro brushed $1.06070, the weakest since Nov. 2, as it continued to slump after the European Central Bank last week left the door open to a rate cut in June.