Rupee ended lower, Yen firm vs. Dollar

Wednesday,   04-Sep-2024   04:14 PM (IST)

The Indian rupee ended the session slightly lower at 83.9650/9750 levels compared to its opening at 83.94/95 levels after touching the low of 83.9750/9850. Rupee traded in the narrow range of 83.94-83.9750 levels today wedged between negative global cues and support from the central bank. RBI was likely selling dollars at the 83.97 level today to keep the rupee from dropping to a lifetime low. The slump in oil prices and the dovish Federal Reserve outlook countered the poor risk mood. Most Asian currencies were up. Meanwhile, the overnight weakness in U.S. equities, after data that indicated manufacturing activity remained weak, percolated to Asian and European equities. Indian government bond yields were down as U.S. yields declined, while markets await jobs data for further cues. Benchmark equity indices ended in red, with Nifty50 giving up its 14-day winning streak, buoyed by negative global sentiments. The BSE Sensex shed 202.80 points or 0.25% to settle at 82,352.64, while the NSE Nifty50 dropped 81.15 points or 0.32% to end at 25,198.70. In the forward segment 1mth, 3mth and 6mth annualized premia ended the day at 1.19%, 1.32% and 1.63% respectively.

The Japanese yen and the Swiss franc firmed against the dollar on Wednesday as investors scurried to safer assets after a sharp selloff on Wall Street in the prior session sparked by concerns about the U.S. economy and tech sector valuations. The catalyst was ostensibly some soft U.S. manufacturing data, which fanned worries about a hard landing for the world's biggest economy, with traders already nervous ahead of crucial monthly payrolls data on Friday. U.S. equity indexes slid on Tuesday, with AI chip giant Nvidia tumbling nearly 10%. The risk-off mood spilled over to Asia and Europe on Wednesday. The yen strengthened as much as 0.4% to 144.89 per dollar before last trading up about 0.2% at 145.195 as of 0902 GMT, following a 1% rally overnight. Dollar/yen hit a multi-month low of 141.68 on August 5 after a surprisingly weak U.S. payrolls data and an interest rate hike from the Bank of Japan triggered a massive unwind of yen-funded carry trades. Risks to the U.S. soft-landing scenario - which had been gaining traction recently in markets - saw traders raise the chances of a 50-basis point Federal Reserve interest rate cut this month to 37% from 30% a day earlier, according to the CME Group's FedWatch Tool. Ahead of that, investors will keep a close eye on job openings data on Wednesday and jobless claims on Thursday. U.S. markets were closed for the Labor Day holiday on Monday and came back Tuesday to a weak Institute for Supply Management survey that suggested factory activity in the country would remain subdued for a while. The Swiss franc, another safe haven, strengthened about 0.2% to 0.8487 per dollar. The euro was flat at $1.10525, recovering from marginal declines earlier in the session. Euro zone business activity received a boost from France hosting the Olympic Games last month but the malaise in the bloc is likely to return once the Paralympics wraps up as demand remains weak, a survey showed.