Rupee opened higher, Dollar lower vs. major currencies

Tuesday,   04-Oct-2022   09:56 AM (IST)

The Indian rupee opened the day higher at 81.67/68 levels compared to its previous close at 81.8725/8825 levels after Treasury yields plunged following data that showed a further slowdown in U.S. manufacturing activity. Most Asian currencies little changed. Preliminary trade deficit data released after market hours yesterday showed that India posted a trade deficit of $26.7 billion in September, down from $28.7 billion in the previous month. Indian government bond yields lower tracking drop in U.S. yields. Indian shares rose 2% led by gains in banks and metal companies, as an attempted bounce in global equities and upbeat quarterly updates from companies lifted sentiment ahead of the corporate earnings season. At 9.18 AM, the S&P BSE Sensex was trading at 57,686 up 897 point, while the broader Nifty50 was at 17,167 up 280 point. As per the technical indicators range for the USDINR pair may be 81.40-81.90 levels. Rupee has an immediate support at 81.78 levels. A breach of the same may see rupee at 81.93 followed by 82.05 levels. On the positive side rupee is likely to face resistance at 81.48 levels and if it is able to break the same then it may gain up to 81.35 levels followed by 81.29 levels.

Dollar retreated after Pound rose to a fresh post-budget high, weighing on the broader U.S. dollar index, as sterling extended its recovery a day after the British government capitulated on tax cuts. British Prime Minister Liz Truss was forced on Monday into a humiliating U-turn after less than a month in power, reversing a cut to the highest rate of income tax that helped spark turmoil in financial markets and a rebellion in her party. Dollar also lost some support from a slide in Treasury yields as local economic data showed a slowdown in manufacturing, hinting that aggressive Federal Reserve rate hikes are already being felt. ISM survey showed U.S. manufacturing activity was the slowest in nearly 2-1/2 years in September as new orders contracted amid aggressive interest rate increases from the Federal Reserve to cool demand and tame inflation. Survey also showed a measure of manufacturing employment contracted last month for the fourth time this year. A gauge of inflation at the factory gate decelerated for a sixth straight month. ISM's manufacturing PMI dropped to 50.9 this month, the lowest reading since May 2020, from 52.8 in August. Japanese finance minister Shunichi Suzuki repeated on Monday that authorities stand ready for "decisive" steps in the foreign exchange market if "sharp and one-sided" Yen moves persist. Yen has been weakening due to Japan's policy of keeping interest rates pinned down at a time when they are rising elsewhere.