The Indian rupee ended the session lower at 82.63/64 levels compared to its opening at 82.5525/5625 levels after touching the low of 82.6475/6575 levels due to higher oil prices and likely month end dollar demand from importers. Higher near-maturity U.S. Treasury yields were also limiting the gain in rupee. Rupee traded in the range of 82.5325-82.6475 levels today. Rupee had opened slightly higher today as a softer U.S. dollar aided rupee in a relatively quiet trading session. Overall, Asian currencies traded mixed, with the Thai baht and Malaysian ringgit leading losses against the U.S. dollar, while the Korean won and Indonesian rupiah gained. In addition to IPO-related equity flows, India’s GDP numbers and U.S. economic data are the key monitorables for the rupee over this week. Indian government bond yields down on continued value purchase from investors. Indian shares rose on Monday after easing concerns over the deposit growth at private lender HDFC Bank lifted financials, though a drop in information technology (IT) stocks on U.S. rate concerns capped the gains. The Nifty 50 index settled 0.21% higher at 19,306.05, while the S&P BSE Sensex rose 0.17% to 64,996.60. In the forward segment 1mth, 3mth and 6mth annualized premia ended the day at 1.23%, 1.32% and 1.36% respectively.
The dollar slid from a 12-week peak on Monday after Federal Reserve Chair Jerome Powell left open the possibility of further rate hikes, while the China-sensitive euro edged up in the wake of Beijing halving its stamp duty on stock trading. The dollar index, which measures the U.S. currency against six peers, edged 0.06% lower at 104.11, after hitting its highest since early June on Friday. The index is up over 2% in August and set to snap a two-month losing streak. In an eagerly awaited speech at the annual Jackson Hole Economic Policy Symposium, Powell promised on Friday to move with care at upcoming meetings as he noted both progress made on easing price pressures as well as risks from the surprising strength of the U.S. economy. Markets anticipate an 80% chance of the Fed standing pat next month, the CME FedWatch tool showed, but the probability of a 25 basis point hike in November is now at 51% versus 33% a week earlier. A series of strong U.S. economic data releases has helped ease worries of a recession but with inflation still above the Fed’s target, some investors are worried that the U.S. central bank will keep interest rates at elevated levels for longer. With the Fed highlighting the importance of the upcoming U.S. economic data, investors’ focus this week will firmly be on reports on payrolls, core inflation and consumer spending. Elsewhere, the euro, which has fallen 1.7% so far in August, rose 0.14% to $1.0809 after China halved the stamp duty on stock trading in the latest attempt to boost the struggling market in the world’s second-biggest economy. But the single currency stood near an almost 11-week low hit on Friday after European Central Bank President Christine Lagarde emphasised that policy needed to be restrictive. China’s Yuan steadied against the dollar, buoyed by the Chinese central bank persistently setting stronger-than-expected daily-mid-points. The Bank of Japan will maintain its current ultra-easy policy as underlying inflation in Japan remains “a bit below” its target, the central bank’s governor said on Saturday.