Rupee ended higher, Euro higher vs. Dollar

Monday,   30-Jan-2023   04:11 PM (IST)

The Indian rupee ended the session higher at intraday high of 81.4950/5050 levels compared to its opening at 81.6350/6450 levels. The choppiness in equity markets soured the mood at the beginning of a week packed with the domestic Union budget and global central bank meetings. Rupee traded in the range of 81.4950-81.72 levels. There were corporate dollar inflows in the latter half of the session, otherwise, the day was fairly quiet. Investors will be keeping tabs on key events such as India's budget and the U.S. Federal Reserve policy decision, both due on Feb. 1, followed by central bank meetings in Europe and England. Indian government bond yields ended higher for the third consecutive trading session today as investors remained cautious ahead of the Union budget announcement, while elevated borrowing by states further hurt sentiment. The mood was sombre amid volatility in Indian stock markets, following a two-day selloff fuelled by a U.S. short-seller's report on the Adani Group flagging concerns about the conglomerate's debt levels and its use of tax havens. The key benchmark indices exhibited high volatility amid alternate bouts of buying and selling ahead of the Union Budget.  The BSE Sensex closed 170 points higher at 59,500. The NSE Nifty ended at 17,649, up 45 points. In the forward segment 1mth, 3mth and 6mth annualized premia ended the day at 1.92%, 2.57% and 2.45% respectively.

The dollar languished near an eight-month low on Monday ahead of a slew of central bank meetings this week, while higher Spanish inflation data supported the euro ahead of euro area readings on Wednesday. The U.S. dollar index, which measures the currency against a basket of its peers including the euro, was flat at 101.88, having hit an eight-month low of 101.50 last week. It was down more than 1.5% in January and on track for a fourth consecutive monthly loss, pressured by expectations that the Fed is nearing the end of its rate-hike cycle and that interest rates would not have to rise as high as previously feared. Meanwhile, the euro rose 0.14% to $1.0885 after Spain's consumer prices inched up 5.8% in January compared with the same month last year, faster than the 5.7% annual rate recorded in December and the first increase since last July. Movement was still relatively subdued ahead of policy meetings at the Fed, the European Central Bank (ECB) and the Bank of England (BoE) later this week. The Fed is widely expected to deliver a 25 basis-point rate hike - a shift down from its 50bp and 75bp increases last year - while market watchers say the BoE and ECB are likely to raise rates by 50bps each. The euro, which is headed for a 1.6% monthly gain, has drawn support from continued hawkish rhetoric by ECB policymakers and ebbing fears of a deep recession in the euro zone. Elsewhere, the yen fell 0.2% to 130.17 per dollar after Bank of Japan governor Haruhiko Kuroda on Monday said the central bank must continue its easy policy. The Australian dollar fell 0.4% to $0.7081 but was on track for a monthly gain of nearly 4%, after Australia's inflation rate shot to a 33-year high last quarter, causing traders to ramp up bets that the Reserve Bank of Australia will have to tighten interest rates further. With China returning from its Lunar New Year holiday, focus will be on the upcoming release of its purchasing managers' index (PMI) data on Tuesday. The onshore yuan jumped against the dollar on Monday, rising roughly 0.5% to 6.7492, as investors cheered signs of economic recovery indicated by robust holiday spending and tourism data.