Yesterday Rupee opened
stronger at 72.79 tracking lower crude oil prices, better than expected
inflation numbers and appreciation in Chinese Yuan after PBOC intervention.
USDINR pair touched a high of 72.83 right after open, after which Rupee kept on
appreciating and the pair touched a low of 72.51 to finally close at 72.6750.
In the debt market, 10Yr Gsec rose due to lower-than-expected CPI data for Oct
and appreciation in rupee. In equity market, Sensex closed at 35,144, up 332
points while Nifty index closed at 10,583, up 100 points. FIIs sold
stocks worth Rs 495 Cr compared to previous day’s net buy of Rs 832 Cr while
DIIs bought stocks worth Rs 336 Cr (provisional).
US-China trade tensions eased after the
reports that US treasury secretary Steven Mnuchin and Chinese Vice premier Liu
had resumed trade talks and that China’s top trade negotiator will head to US
ahead of the G20 summit. Dollar index touched a high of 97.693 but overnight it
moved lower to currently trade at 97.058 levels. US 10Yr is currently trading
at 3.15%. Italian deputy Prime Minister Matteo Salvini said that the Italian
government will maintain its deficit at 2.4% despite EU demands for the budget
plan to be revised. Euro touched a high of 1.1294 but Italy’s budget worries
kept Euro gains capped. The pair is currently trading at 1.1299. Chinese Yuan
moved lower and is currently trading at 6.9488 levels. UK and EU officials have
agreed the draft Brexit agreement after several negotiations. A special UK
cabinet meeting will be held today and PM May has called ministers in Downing
Street for one to one talks on the draft agreement. Crude oil prices moved
sharply lower on oversupply concern and as technical support broke. Yesterday
in its monthly report, OPEC continued to reduce its forecast for oil demand and
sees demand for its own crude falling even faster than expected for 2019. Brent
crude oil futures fell below $66/bbl and are currently trading at $65.33/bbl.
Yesterday US indices closed in red while Asian equities are trading mixed today
morning. Nikkei is up 0.27% while Hang Seng is down 0.13%.
Rupee has opened stronger at 72.18 tracking
lower crude oil prices and weakness in US dollar. PBOC set its reference rate
at 6.9402 compared to yesterday’s 6.9629. Domestic equity indices are trading
flat today. For the day, we expect $/INR to trade in the range 71.98-72.25.
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Yesterday, Rupee opened stronger at 73.35 tracking rebound in equity markets. But the pair gained due to month end dollar demand, continuing capital outflows and a strong dollar. It touched a low of 73.3150 and a high of 73.53 to finally close at 73.45. India and Japan agreed to enter into a $75 bn swap arrangement which provides another option in times of pressure on the Indian unit. In the debt market, 10Yr Gsec ended at an 11 week high as the RBI announced its plan to buy notes in Nov under OMO and 10Yr Gsec touched a high of 7.84% to finally close at 7.81%. In equity market, Sensex closed higher by 718.09 points at 34067.40, while Nifty ended higher by 220.90 points at 10250.90. FIIs sold stocks worth Rs 2,231 Cr compared to previous net sell of Rs 1,357 Cr, while DIIs bought stocks worth Rs 2,527 Cr (provisional).
US-China trade war has once again reappeared on reports that US is preparing a new set of tariffs against Chinese imports if the trade talks between US president Trump and Chinese president Xi Jinping fail to reconcile the ongoing trade issue. Yesterday, Chinese commerce ministry said that they will impose antidumping tax on some chemicals imported from US, Saudi Arabia, Malaysia and Thailand. DXY index is currently trading flat at 96.627 levels. US 10Yr treasury yield is currently trading lower at 3.10% levels, up from a low of 3.08%. Euro continued to remain weak due to Italian budget woes and German political uncertainties. Yesterday, the pair touched a low of 1.1359 and is currently trading at 1.1377 levels. German chancellor Merkel said that she would not seek re-election as CDU chairperson in Dec or another term as chancellor at Germany’s federal election, due in 2021. Brent crude oil futures are trading at $77.05/bbl, up from a low of $76.71/bbl level. Yesterday, US indices closed lower while Asian equities are trading mixed today with Nikkei trading up around 1.47%. Chinese stocks rebounded from losses on the back of comments from the securities regulator that it wants to boost investment in markets. Dow and S&P 500 futures are trading positive today.
Rupee has opened weaker at 73.55 today. Sensex is trading lower by 106.8 points while Nifty is down 24.55 points after early trades. Rupee is likely to remain under pressure due to month end dollar demand, continuing capital outflows and a weak Chinese Yuan. For the day, we expect $/INR to trade in the range 73.42-73.70.