Rupee rises for second day, rising 9 countries to 77.25 as US bond yields fall

Rupee rises for second day, rising 9 countries to 77.25 as US bond yields fall

It moved in a range of 77.17 to 77.31 during the day trade. The rupee finally closed at 77.25, registering a rise of 9 paise over its previous close. On Tuesday, the rupee had settled at 77.34 against the American currency. ”The Indian rupee is see-sawing between gains and losses as the US 10-year yields have pulled back below 3 per cent mark. Risk sentiments are positive as China registered fewer COVID cases.

The rupee advanced 9 paise to close at 77.25 against the US dollar in range-bound trade on Wednesday, as the dollar fell from its 20-year highs and bond rates fell below 3%. The rupee was also underpinned by suspected RBI intervention in the futures market with most currencies trading flat ahead of the release of vital US inflation data. The native currency opened at 77.24 against the US dollar on the interbank exchange market.

Shanghai reported 51 per cent lower cases on Tuesday, which has made investors somewhat hopeful about a possibility of easing lockdowns in China,” said Praveen Singh, AVP- Fundamental currencies and Commodities analyst, Sharekhan by BNP Paribas. The upcoming US CPI print is expected to show a downtick to 8.1 per cent from 8.5 per cent in March. This could be the first decline in inflation readings after seven straight higher readings.

Markets seem to be drawing some solace on this possible downtick, Singh said. ”There are reports of RBI intervention in the futures markets, too. A decline in crude oil prices over the past couple of sessions has also lent support to the rupee at lower levels,” Singh said, adding that the dollar eased from higher levels on positive Asian and European markets and a decline in US Treasury yields.

However, risk aversion in domestic markets and sustained FII outflows are capping sharp gains in the domestic currency. FIIs remained net sellers for the eighth consecutive session on Wednesday and sold assets worth about Rs 3,609 crore. Net FII outflows in the month of May stood at over Rs 21,000 crore.

According to Anindya Banerjee, VP, Currency Derivatives & Interest Rate Derivatives at Kotak Securities Ltd, with most currencies trading flat ahead of important US inflation data tonight, USDINR too remained rangebound. ”Over the near-term, USDINR may continue to be range-bound between 76.80 and 77.70 levels on spot, due to RBI intervention and IPO related FPI flows,” Banerjee said. ”Rupee consolidated in a narrow range after falling to fresh all-time lows earlier this week.

On the domestic front, market participants remained cautious ahead of the inflation number that will be released on Thursday. ”Expectation is that the number could come above the 7 per cent mark. From the US, CPI number will be released and is also expected to remain elevated,” said Gaurang Somaiya, Forex & Bullion Analyst, Motilal Oswal Financial Services.

The dollar index traded below the 20-year high level of 104.49 that it breached early this week ahead of the release of inflation data in the US. The dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.39 per cent lower at 103.51. On the domestic equity market front, the 30-share BSE Sensex ended 276.46 points or 0.51 per cent lower at 54,088.39, while the broader NSE Nifty fell 72.95 points or 0.45 per cent to 16,167.10. Brent crude futures, the global oil benchmark, spurted by 3.26 per cent to USD 105.80 per barrel.

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