Rupee opened flat, Dollar in range vs. major currencies

Tuesday,   23-Apr-2024   09:59 AM (IST)

The Indian rupee opened the day little changed at 83.36/37 levels compared to its previous close at 83.3625/3725 levels on expectations that importers will take advantage of the mini recovery on the currency and bets that Federal Reserve rate cuts are not imminent. Asian currencies were mostly rangebound while equities were a shade lower. Indian government bond yields flattish in early trades after declining on Monday. Indian shares opened higher tracking a rebound in global markets as risk sentiment improved, led by gains in information technology stocks. At 9:22 AM, the S&P BSE Sensex was trading at 73,960 up 311 points, while the broader Nifty50 was at 22,418 up 81 points. As per the technical indicators range for the USDINR pair may be 83.20-83.50 levels. Rupee has an immediate support at 83.38 levels. A breach of the same may see rupee at 83.48 followed by 83.55 levels. On the positive side rupee is likely to face resistance at 83.28 levels and if it is able to break the same then it may gain up to 83.20 levels followed by 83.15 levels.

A firm U.S. dollar had the yen locked near a fresh 34-year low on Tuesday, keeping investors on heightened intervention watch as they looked ahead to key U.S. inflation report and the Bank of Japan's rate decision this week. The yen remained pinned after hitting 154.85 yen on Monday, its lowest level since the mid-1990s, as the stark U.S.-Japan rate differentials came into focus again amid an easing in Iran-Israel tensions. It last hovered around 154.76 per dollar. Traders have been keeping wary eye as yen slips towards 155.00, a level considered by many participants as the new trigger for intervention by Japanese authorities. However, there are doubts about whether Tokyo will act so close to the Bank of Japan's (BOJ) two-day policy meeting that starts on Thursday. Japan's central bank is expected to project inflation will stay around its 2% target for the next three years in new forecasts due on Friday, signalling its readiness to raise interest rates again this year from current near-zero levels. The weak yen complicates the BOJ's policy path, with some market players betting the central bank could come under pressure to hike rates sooner than it wants to slow the currency's decline. Japan's Finance Minister Shunichi Suzuki, who has repeatedly warned against speculative currency moves in recent weeks, said on Tuesday that local authorities will work closely with overseas counterparts to deal with excessive volatility in the foreign exchange market. The dollar's strength has been broad-based, with gains edging toward 5% this year. It was last trading around 106.09, below the five-month highs hit last week after comments from Federal Reserve officials and a run of hotter-than-expected inflation data forced a paring back of rate cut expectations. Markets are currently pricing in a 46% chance of the Fed's first rate cut starting in September, with November not far behind at 42%, according to the CME FedWatch Tool. That was in sharp contrast to just a few weeks ago when markets were betting on June for the U.S. monetary easing cycle to begin. Investors will have another chance to assess the strength of the U.S. economy this week, with first-quarter gross domestic product data on Thursday and personal consumption price expenditures (PCE) index, the Fed's preferred measure of inflation, on Friday. Markets forecasts are for a 0.3% increase in the headline PCE number in March, unchanged from the previous month, and a year-on-year gain of 2.6%, compared with a 2.5% increase in February, according to a Reuters poll. While September has emerged as the new bet for the Fed's first rate cut, expectations remain for the European Central Bank (ECB) and Bank of England (BoE) to start cutting by mid-year. That divergence has put the euro on the back foot, with the currency on track for its biggest monthly drop against the dollar since January.