Rupee closes strong, Dollar edges lower

Friday,   26-May-2023   04:19 PM (IST)

The Indian rupee ended the session 0.20% higher against the dollar and snapped two straight weeks of losses. After opening the day at 82.7250, rupee touched an intra-day high of 82.5675 before closing at 82.5750 levels. Persistent inflows into equities aided rupee’s recovery from a near three-month low of 82.85 hit earlier in the week. Foreign investors have poured in around $4 billion into equities this month. Rupee was also helped by the Chinese yuan-lead recovery in Asia FX and the dollar index's pullback. Expectations of RBI keeping a lid on the rupee's losses alongside dollar inflows have lent support to the rupee in recent sessions. Rupee traded in the range of 82.5675-82.7325 levels today. The benchmark BSE Sensex rose 629.07 points, or 1.02%, to 62,501.79, while the broader NSE index gained 178.20 points, or 0.97%, to 18,499.35, led by information technology stocks and a jump in Reliance Industries. Indian government benchmark 10-year bond yield was down 1 bps at 7.0007%; vs previous close of 7.0068%, as traders await fresh cues after strong demand at auction. In the forward segment 1mth, 3mth and 6mth annualized premia ended the day at 1.41%, 1.51% and 1.59% respectively.

The U.S. dollar edged lower in early European trading Friday but was on course for its third consecutive weekly gain as U.S. rate hike expectations grow. The Dollar Index fell 0.1% to 104.04, just below Thursday's two-month high of 104.31. Data released on Thursday showed that the number of Americans filing new claims for unemployment benefits increased only moderately last week to 229,000, while first-quarter GDP growth was revised higher to 1.3%, from 1.1%. Market attention today is going to be on the release of the personal consumption expenditure index, which the Federal Reserve will be closely watching for inflation clue as it heads into its June policy meeting. The two sides appear to be closing in on a deal to lift the debt ceiling, but any agreement would have to pass the Republican-controlled House of Representatives and the Democratic-controlled Senate. Elsewhere, EUR/USD edged higher to 1.0731, remaining close to a two-month low, even as European Central Bank officials hint at further interest rate hikes to tame still elevated inflation. GBP/USD rose 0.2% to 1.2344 after British retail sales rose by more than expected in April, rising by 0.5% from March, above the 0.3% expected and an improvement from the drop of 1.2% the prior month. USD/JPY edged 0.2% lower to 139.78, just off a six-month high, with softer-than-expected Tokyo inflation data today lifting expectations that the Bank of Japan will hold off on tightening policy this year.