Rupee opened lower, Dollar range bound vs. major currencies

Tuesday,   31-Jan-2023   09:48 AM (IST)

The Indian rupee opened the day lower at 81.58/59 levels compared to its previous close at 81.4950/5050 levels as the dollar gained on tepid risk appetite, with investors keeping tabs on the Adani Group saga, the upcoming Union budget and global central bank meetings. Meanwhile, most Asian emerging market currencies declined as the dollar index climbed above the 102 level overnight, with caution setting in ahead of the U.S. Federal Reserve decision due late on Wednesday. Indian government bond yields were largely unchanged today after government announced sale of a new 10-year bond this week. Frontline indices started Tuesday's trade on a flat note as investors looked forward to the pre-budget Economic Survey for 2023-24, which will be tabled in the Parliament later today. At 9:20 AM, the S&P BSE Sensex was trading at 59,404 down 96 point, while the broader Nifty50 was at 17,631 down 18 point. As per the technical indicators range for the USDINR pair may be 81.45-81.95 levels. Rupee has an immediate support at 81.72 levels. A breach of the same may see rupee at 81.88 followed by 82.04 levels. On the positive side rupee is likely to face resistance at 81.42 levels and if it is able to break the same then it may gain up to 81.34 levels followed by 81.19 levels.

The dollar was eyeing a fourth monthly loss on Tuesday as investors reckon a peak in U.S. interest rates could swing into view as soon as this week’s Federal Reserve meeting. Currency trade was subdued in the lead up to Wednesday’s Fed rate decision, and ahead of Bank of England and European Central Bank rate decisions on Thursday, though cautiousness across financial markets lifted the greenback a little bit overnight. The euro rose as far as $1.0913 after data showed Spanish inflation running surprisingly hot in January, before the broader mood reeled it back to $1.0851. The common currency is up 1.3% this month and is loitering near a nine-month peak. The U.S. dollar index is down 1.3% for January so far, though it rose 0.3% to 102.19 overnight. The Japanese yen fell 0.4% overnight but is set for its third monthly gain as markets anticipate shifts in monetary policy. Sterling and the Australian, New Zealand and Canadian dollars also made overnight losses but are set for monthly gains. The Aussie fell 0.7% overnight, but at $0.7060 it is up about 3.6% for the month so far. The kiwi, last at $0.6474, is up almost 2% for January. Interest-rate futures indicate market expectations for a 25 basis point (bp) hike from the Federal Reserve to take the Fed funds rate window to 4.5%-4.75%. Pricing suggests two more 25 bp hikes are expected, before cuts arrive later in the year. Ahead of the Fed, traders await Chinese manufacturing data and Australian retail sales figures later on Tuesday, as well as a preliminary reading for euro zone gross domestic product. U.S. employment cost data will also be closely watched because the labour market can guide monetary policy.