The Indian rupee initiated Tuesday’s trading session with a 4 paise gain against the backdrop of a retreat in the greenback and US Treasury yields. The local currency commenced at 82.59 against the dollar, a modest advancement from the previous closing rate of 82.63.
The dollar index, a measure gauging the US currency against six primary counterparts, experienced a marginal decline of 0.077%, reaching 103.85. This follows a 0.2% slip on the preceding Monday. With a 2% rise over the course of the month, the index reflects robust economic data that has heightened the anticipation of prolonged elevated interest rates.
The US 10-year bond yields dipped by four basis points on Monday and continued their descent in the Asian session, reaching 4.18%. Meanwhile, the two-year yields dropped below 5%.
Market Dynamics Across Currencies
- The yen witnessed a 0.12% ascent, valuing at 146.36 per dollar.
- The euro displayed a 0.11% gain, standing at $1.0829.
- Sterling saw a 0.10% rise, reaching $1.2616.
- The Australian dollar recorded a 0.03% addition, amounting to $0.643.
- The New Zealand dollar experienced a minor 0.02% decline, resting at $0.591.
In the previous session, the rupee concluded with a 2 paise upturn, settling at 82.63 against the dollar.
Market Focus on US Economic Data Investors’ attention is directed towards the upcoming release of the US consumer confidence and job openings report, scheduled later in the day.
Rupee’s Trajectory and Economic Outlook
The rupee is anticipated to encounter a hurdle near the 83.00 level, coinciding with expectations of a correction in the dollar and US Treasury yields, coupled with the softening of crude oil prices. Forecasts suggest that the dollar might ease in response to forthcoming economic indicators from the US, signifying that the economy is feeling the impact of aggressive rate hikes. This, in turn, may lead the central bank to adopt a less hawkish stance than initially projected, possibly indicating that interest rates are nearing their peak.
India’s economic growth is projected to gather momentum, reaching around 7.8% in the April-June 2023 period, a notable acceleration from the 6.1% recorded in the previous quarter.
USDINR Outlook and Crude Oil Influence
The USDINR pair is likely to extend its appreciation towards 82.20 levels throughout the week, provided it maintains its position below the 83.00 level. Only a decisive close above 83.00 could potentially reverse the trend and open avenues for levels around 83.30/83.50.
In the midst of these market dynamics, crude oil prices experienced a decline, indirectly bolstering the rupee. Brent crude futures registered a 0.04% decrease, settling at $84.39 per barrel, while US West Texas Intermediate crude (WTI) saw a 0.09% dip, resting at $80.03.
Disclaimer: The information provided here is for educational purposes only and should not be considered financial advice. Always conduct thorough research and consider consulting a financial professional before engaging in algorithmic trading.