Rupee opened at record low, Dollar higher vs. major currencies

Friday,   19-Apr-2024   10:02 AM (IST)

The Indian rupee opened the day at record low of 83.5550/5650 levels compared to its previous close at 83.5375/5475 levels in the wake of a jump in oil prices and risk aversion following a media report that Israeli missiles struck Iran. Asian shares declined while safe haven demand lifted U.S. Treasuries. Asian currencies, has been pressured by worries over the Middle East and the likelihood that U.S. interest rates will remain higher for longer. However, likely intervention of RBI helped to limit the losses in rupee. RBI is likely selling dollars. RBI likely sold dollars in NDF also, before inter-bank opening, to mitigate the impact of negative news. Indian government bond yields marginally up in early trades as oil prices rise, while traders eye fresh supply. Indian shares opened lower, tracking Asian peers, on worries of an escalation in geopolitical tensions in the Middle East, while post-earnings drop in software services firm Infosys dragged down information technology stocks. At 9:16 AM, the S&P BSE Sensex was trading at 71,882 down 607 points, while the broader Nifty50 was at 21,793 down 203 points. As per the technical indicators range for the USDINR pair may be 83.40-83.65 levels. Rupee has an immediate support at 83.58 levels. A breach of the same may see rupee at 83.66 followed by 83.70 levels. On the positive side rupee is likely to face resistance at 83.47 levels and if it is able to break the same then it may gain up to 83.40 levels followed by 83.35 levels.

The resurgent dollar headed towards a second straight week of gains on Friday as a hotter-than-expected U.S. economy has pushed back investors' and policymakers' expectations of the trajectory of Federal Reserve rate cuts this year. The greenback's 0.17% gain for the week was somewhat capped by a slight stall in its rally since Thursday following a rare trilateral warning from finance chiefs in the United States, Japan and South Korea over the latter two's sliding currencies, raising the risk of a potential joint intervention. That's as Asian currencies, in particular, come under immense pressure from the dollar's strength. The yen was last little changed at 154.61 per dollar, languishing near a 34-year low and not far from the 155 level which traders see as a new line in the sand that would prompt an intervention from Tokyo. The Japanese currency was eyeing a weekly loss of more than 0.8% and was down 2% for the month thus far, ahead of the Bank of Japan's (BOJ) monetary policy meeting next week. BOJ Governor Kazuo Ueda said on Thursday the central bank may raise interest rates again if the yen's declines significantly push up inflation, highlighting the impact currency moves may have on the timing of the next policy shift. The yen was last little changed at 154.61 per dollar, languishing near a 34-year low and not far from the 155 level which traders see as a new line in the sand that would prompt an intervention from Tokyo. The Japanese currency was eyeing a weekly loss of more than 0.8% and was down 2% for the month thus far, ahead of the Bank of Japan's (BOJ) monetary policy meeting next week. BOJ Governor Kazuo Ueda said on Thursday the central bank may raise interest rates again if the yen's declines significantly push up inflation, highlighting the impact currency moves may have on the timing of the next policy shift. Elsewhere, sterling fell 0.08% to $1.2427, leaving it on track to lose 0.18% for the week. The euro eased 0.06% to $1.0637 and was set to clock a marginal weekly loss. While expectations of a first Fed rate cut have been pushed back to later this year, traders expect the European Central Bank to begin its rate easing cycle in June, which will likely keep the common currency weak for some time. Fed funds futures now show just about 40 basis points (bps)worth of cuts priced in for the U.S. central bank this year - a significant pullback from the 160 bps of easing expected at the start of the year. The shift in rate expectations has come on the back of a slew of resilient U.S. economic data which has repeatedly surpassed expectations, alongside still-sticky inflationary pressures. That's also resulted in Fed policymakers pushing back on bets for U.S. rate cuts beginning as early as June, and Chair Jerome Powell early this week similarly said monetary policy needs to be restrictive for longer. Against a basket of currencies, the greenback rose 0.05% to 106.22, hovering near a more than five-month high of 106.51. The Australian dollar fell 0.15% to $0.6411 and eyed a weekly drop of more than 0.8%. Data on Thursday showed domestic employment fell in March after an enormous gain the month before while the jobless rate resumed its uptrend, a sign that the relatively-tight labour market was still on track to loosen, albeit at a slower pace.