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Rupee opened higher, Dollar lower vs. major currencies

Thursday,   18-Apr-2024   09:59 AM (IST)

The Indian rupee opened the day higher 83.50/51 levels compared to its previous close at 83.5350/5450 levels amid expectations that U.S. interest rates will remain higher for longer and a pullback in oil prices. Asian currencies recovered, while equities were mostly lower. Indian government bond yields marginally down in early trades today as Treasury yields as well as oil prices dip. Indian shares opened higher after falling for three consecutive sessions, tracking their Asian peers and led by energy stocks on the back of a fall in crude prices, while global supply worries lifted metals stocks. At 9:16 AM, the S&P BSE Sensex was trading at 73,206 up 264 points, while the broader Nifty50 was at 22,246 up 98 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 83.63 followed by 83.68 levels. On the positive side rupee is likely to face resistance at 83.48 levels and if it is able to break the same then it may gain up to 83.40 levels followed by 83.34 levels.

The dollar was soft on Thursday as traders assessed the U.S. interest rates outlook in the wake of comments from Federal Reserve officials that cemented expectation of monetary settings remaining restrictive for a while longer. The dollar has been rising in recent weeks as a slew of strong U.S. economic data and persistent inflation dashed expectation of rate cuts in the near term. Simmering tension in the Middle East also added to the dollar's safe-asset appeal. Dollar strength has cast a shadow across currency markets, keeping the yen rooted near 34-year lows and leading to several warnings from Japanese authorities as traders fret about possible intervention. Emerging-market currencies have also been under pressure. The U.S., Japan and South Korea agreed to "consult closely" on foreign exchange markets in their first trilateral finance dialogue on Wednesday, in a nod to concern from Tokyo and Seoul over their currencies' recent sharp declines. On Thursday, the euro was a tad weaker at $1.0664, having notched a 0.5% gain on Wednesday and lifting away from a five-month low touched on Tuesday. Sterling was last at $1.2449, up 0.02% on the day. The dollar index, which measures the U.S. currency against six peers, was last at 105.97, inching away from the five-and-a-half-month high of 106.51 hit on Tuesday as traders consolidated positions. The index is up 4.5% this year. Markets are pricing in 44 basis points of cuts from the Fed this year, drastically lower than the 160 bps expected at the start of the year, with September becoming the latest starting point of the easing cycle, showed the CME FedWatch Tool. Traders had earlier expected the Federal Open Market Committee (FOMC) to start cutting rates in June but a string of data including the consumer price index (CPI) and push-back from central bankers have altered that expectation. U.S. economic activity expanded slightly from late February through early April and firms signalled they expect inflation pressure to hold steady, a Federal Reserve survey showed on Wednesday. Fed Governor Michelle Bowman on Wednesday said progress on slowing U.S. inflation may have stalled, and it remains an open question whether rates are high enough to ensure inflation returns to the Fed's 2% target. The yen strengthened 0.05% to 154.29 a dollar but remained close to the 34-year low of 154.79 touched on Tuesday. The currency is down 8.65% so far this year. Market participants raised the bar of possible intervention by Japanese authorities to prop up the yen, now pinpointing the 155 level rather than the previous 152, even if they believed Japan could step in at any time. Japan last intervened in the currency market in 2022, spending an estimated $60 billion to defend the yen.