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Rupee ended lower, Euro falls vs. Dollar

Monday,   10-Jun-2024   04:06 PM (IST)

The Indian rupee ended the session lower at 83.5050/5150 levels compared to its opening at 83.48/49 levels after touching the low of 83.51/52 levels weighed down by a rise in U.S. bond yields, but likely intervention by the Reserve Bank of India helped limit rupee's losses. The RBI likely sold dollars near 83.50 levels to limit the rupee's losses. Rupee traded in the tight range of 83.48-83.51 levels following a gap-down opening today. Asian currencies declined between 0.1% to 0.7%, with the Indonesian rupiah dropping to a more than four-year low. Indian government bond yields were up tracking U.S. yields. Indian shares ended lower weighed down by IT stocks on U.S. rate cut concerns, easing from record highs hit at the open as markets took a breather after a sharp post-election results rally. The BSE Sensex ended 203.28 points, or 0.27%, lower at 76,490.08, while the Nifty50 ended at 23,259.20, down 30.95 points or 0.13%. In the forward segment 1mth, 3mth and 6mth annualized premia ended the day at 0.95%, 1.07% and 1.21% respectively.

The euro fell sharply on Monday, hit by political uncertainty after gains by the far-right in voting for the European Parliament on Sunday prompted a bruised French President Emmanuel Macron to call a snap national election. The uncertainty in France adds one more element to what will be a busy week for markets with crucial U.S. inflation data due on Wednesday, the same day as a Federal Reserve policy meeting, and then the Bank of Japan rounding off the week. The Federal Reserve will conclude its two-day policy meeting on Wednesday. Data on Friday showed non-farm payrolls increased by 272,000 jobs last month, well above expectations in a Reuters poll for 185,000. Markets are now pricing in 36 basis points of Fed cuts this year compared to nearly 50 bps - or at least two cuts - before the jobs data. U.S. consumer inflation data will be another factor in the Fed's decision making. While no policy shift is expected at the meeting, the Fed will issue the latest batch of 'dot plots' policy makers' projections of the path of interest rates. At the last such release in March, the median projection was for three 25-basis-point rate cuts this year. Investors will be watching to see by how much that is revised down. The paring back of expectations for rate cuts has been supporting the dollar for much of 2024, with the Japanese yen suffering particularly. Japan will also be in focus this week, as the Bank of Japan is due to hold its two-day monetary policy meeting on Thursday and Friday, with the central bank widely expected to maintain short-term interest rates in a 0-0.1% range. Reuters reported last week that BOJ policymakers are brainstorming ways to slow its bond buying and may offer fresh guidance. Speculation is building in the market that the BOJ may tweak its bond buying arrangements, and if the central bank fails to meet these bets, the yen could come under further pressure. Japanese officials spent around 9.8 trillion yen ($62.46 billion) on currency intervention to support the currency in April and May.