INDIA: On Friday, the Indian rupee may start out slightly stronger versus the dollar amid a further decline in U.S. Asian currencies increased due to Treasury yields.
The local currency suffered from investors’ reluctance to invest in risky assets as a result of the global economy’s and China’s bleak prospects.
The rupee is likely to begin trading at approximately 82.45 to the dollar, down from 82.4900 in the previous session. On Thursday, the local currency managed to reach 82.15, but it thereafter suffered due to widespread dollar demand.
The 82 to 83 level is likely “the new range” for the rupee, claims a trader in Mumbai, and this is becoming “increasingly evident.”
As U.S. Treasury yields continued to decline, Asian currencies increased while the dollar index decreased. Over 40 basis points (bps) lower than last week’s highs, the 10-year yield dropped below 3.90% in Asia.
Data demonstrating that consumer and business spending in the United States decreased in the third quarter helped to support the demand for Treasury securities.
After the Bank of Canada startled the market on Wednesday by announcing a smaller-than-expected rate hike, the ECB’s dovish comments reinforced market perceptions that central banks will probably reduce the pace of monetary tightening.
The markets have resumed trading on a Fed pivot, although this is characterised as hiking in smaller increments rather than a “true” shift from rises to cuts, Citi strategists claim, emphasising that an actual halt is still some time off.
Investors are currently focused on the upcoming Federal Reserve meeting, which is going to be held next week.
Although a rate hike of 75 basis points following its policy meeting on November 1-2 is almost assured, the likelihood of a rate increase of 50 basis points in December was estimated by CME’s FedWatch tool to be 55%.
The offshore Chinese yuan increased to 7.2380 to the dollar, driving Asian currencies higher.
Also Read: Rupee Hits an All-time Low against US Dollar for the First Time
