Rupee gains on jobs data, bond prices fall on rate hike agenda

Rupee gains on jobs data, bond prices fall on rate hike agenda

But the unemployment rate, a key indicator, fell below 4%, keeping the odds of rate hikes unchanged, CR Forex said.

The Indian rupee fortified against the US dollar, while bond costs debilitated on Monday, because of different considerations. The Indian money shut down at 74.038 per dollar, up from its past close of 74.31 per dollar. Currency merchants say the Reserve Bank of India (RBI) let the rupee appreciate initially, however at that point stepped in to wipe up the oversupply of the US unit. The dollar by and large stayed frail against other currencies after employment data for December showed the United States added generally 50% of the normal 400,000 individuals to the labor force.

The general weakness of the US dollar was also reflected in the region, with most currencies strengthening against the greenback. The Indian rupee and Indonesian rupiah each strengthened 0.36% against the dollar on Monday.

Meanwhile, the US Fed’s rate hike program and the RBI’s generally coordinated move have allowed the bond market to brace for rate hikes, as evidenced by rising bond yields.

The 10-year bond yield closed at 6.59%, up from its previous close of 6.54%, amid concerns over tighter monetary policy.

Bond markets saw a sharp drop, which started last week.

The sale of Indian bonds was sparked by a global bond rout and soaring crude oil prices, Kotak Mahindra Bank economists Upasna Bhardwaj and Anuragh Balajee noted in a report.

The Fed’s hawkish minutes, indicating faster normalization, pushed the yield on US 10-year bonds up 28 basis points, while crude oil prices rose 5% from last week.

“RBI’s intermittent sales of OMOs on the secondary market (Rs15,500 cr since the end of October 2021) are weighing more on market sentiment. The devolution of the 5-year bond (5.74% GS 2026) further confirmed the increase in stress. Markets are now awaiting the announcement of a new 10-year benchmark and inflation data this week, ”the duo wrote. However, bond and currency traders said domestic markets are likely to remain turbulent until the Union’s budget is announced on February 1.

“The inclusion of Indian bonds in global bond indices is unclear. Some of that clarity can come during the budget. If there is a positive indication, it will be positive for both the bond and the rupee. Until then, a small lateral movement is expected, ”said the treasury manager of a private sector bank. Bond traders expect the 10-year yield to remain stable around the current level.

“Technically, the USDINR spot pair broke through the 200-day moving average support at 74.30 levels, indicating a continuation of the downtrend to the support area at 73.90-73.75 . The resistance zone is at the 74.18-74.30 levels, ”said Sriram Iyer, senior research analyst, Reliance Securities. “The USDINR Spot pair could trade in a range of 73.88-74.30 levels during the next session,” Iyer said.

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