Rupee opens 27 paise higher 83.06 against the dollar after soft US inflation
The Indian rupee opened 27 paise higher against the US dollar on Wednesday amid sharp drop in American currency and Treasury yields. The local unit opened at 83.06 a dollar as compared to its previous close of 83.33.
The dollar index, a measure of the US currency against six peers, rose 0.02% to 104.08, after dropping below 104 level in the previous session. The 10-year US benchmark yield was little changed at 4.45% on Wednesday after falling to a low of 4.41%.
The Indian markets were shut on Tuesday. On Monday, the rupee ended 1 paise higher at 83.33 a dollar.
The US dollar tumbled by the most in a year after soft inflation data raised hopes that the US Federal Reserve would not hike interest rates further and start cutting rates by mid-2024.
“We had expressed our disclination to pursue major upside, despite a strong push into the 83.3-83.4 region on Friday, and had wanted to see it as an aberration, given there was no follow through buying. If 83.02 holds expect a pull back not exceeding 83.19, but the prospects of extended slippage to 82.78, appears higher,” said Anand James, Chief Market Strategist at Geojit Financial Services
US inflation rose by 3.2% in the 12 months through October after rising 3.7% in September. Economists polled by Reuters had forecast the CPI increasing 3.3% on a year-on-year basis.
Meanwhile, India’s retail inflation, measured by the consumer price index (CPI), eased to 4.87% in October, recording a four month low, according to data. The retail inflation print came in at 5.02% in September.
Uptrend in domestic equities supported gains in domestic currency, while a rise in crude oil prices capped the upside.
Brent crude rose 0.35% to $82.76 a barrel, while US West Texas Intermediate crude gained 0.31% to $78.50 a barrel.
On the domestic front, the Indian stock market indices traded a percent higher led by across the board buying amid positive global cues.
The Sensex was trading 565.77 points, or 0.87%, higher at 65,499.64, while the Nifty 50 gained 182.00 points, or 0.94%, to 19,625.55.
On Monday, the Foreign institutional investors (FIIs) net sold Indian shares worth ₹1,244.44 crore, while Domestic Institutional Investors (DIIs) net purchased shares to the tune of ₹830.40 crore, as per provisional data available on the exchanges.
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