UTV: Rupee Weakens As Strong Dollar Climbs Overseas
A strong dollar overnight after the Federal Reserve stunned markets by lifting anemergency lending rate for the first time since the financial crisis, weighed on rupeethat registered a weak start on Friday after rising close to a 2 week high during theweek. Indian rupee for the front month contract on NSE started the day lower at around Rs.46.45 against the US Dollar after closing yesterday at 46.26.
After depreciating sharply during the initial moments, the contract was seen moving withina tight range of 46.40-50.Rupee was last seen trading at 46.46, down almost 0.20 paise or0.42% as compare to its previous closing of 46.26. It hit an intra day high of 46.41 andregistered a low of 46.48. Rupee on NSE is expected to find an intra day resistance at46.57.
The US dollar rose to a 9-month high against the euro after the Federal Reserve onThursday made its first interest rate move since December 2008, hiking an emergencylending rate it charges banks. The Fed cast its decision to raise the discount rate to0.75 percent from 0.5 percent as a response to improved financial market conditions.
Meanwhile, the key benchmark indices cut losses after an initial sharp slide triggered bythe US Federal Reserve's decision to lift its discount rate for the first time since thefinancial crisis. The BSE 30-share Sensex was down 124.22 points or 0.76%, up close to 50points from the day's low. The market breadth was weak. Asian stocks fell after the USFederal Reserve raised its discount rate in a fresh sign the Fed thinks financial marketsare gradually returning to normal.
Spot rupee was last trading at 46.43 against the US dollar at 10.58 AM IST as compared to46.29 in the last trading session, losing 15 points or 0.32%, as per the data from CCIL.
In the domestic bond market, the yield on most traded 10-year benchmark federal paper,6.35% GS 2020, increased 4 bps to 7.90% during the morning trade at around 10.54 AM ISTcompared to 7.86% at close in the previous trading session. Bond yield increased duringthe morning trade tracking U.S. treasury yields that closed high yesterday owing to hikein discount rate i.e. rate charged to banks for emergency rate, by Federal Reserve. TheFederal Reserve raised the discount rate from 0.5% to 0.75%.
Meanwhile, light sweet crude oil for March delivery was trading down US$ 1.01 to 78.05 perbarrel on the GLOBEX division New York mercantile exchange. Oil prices fell to more than$78 a barrel Friday in Asia after the U.S. Federal Reserve's unexpected hike to interestrates for emergency loans to banks boosted the dollar, making commodities less attractiveto investors.
