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INDIA RUPEE-Rupee rises as lower U.S. yields whet risk appetite, hurt dollar

10/04/2022 | 06:07am EST

MUMBAI, Oct 4 (Reuters) - The Indian rupee closed higher against the U.S. currency on Tuesday as a sharp decline in Treasury yields stoked a rally in global equities and dampened demand for the dollar.

The rupee ended at 81.52 per U.S. dollar, up from 81.8725 in the previous session. The local unit opened higher at 81.67 and reached a day's high of 81.3650.

The rupee's performance on Tuesday was broadly in line with its Asian peers. The currency of Asia's third largest economy would likely have fared better had it not been for oil prices. The December Brent crude contract rose 0.7% to $89.48, after climbing more than 4% in the previous session.

Analysts reckon that the recent choppy price action in rupee is likely to persist as the aggressive monetary policy stance of the U.S. Federal Reserve impacts portfolio flows and the dollar index.

"Since August, USDINR has been quite erratic with intra-day price action or range limited but opening gaps (up or down) quite large. Erratic movements may continue for the time being," said Anindya Banerjee, head research - forex and interest rates at Kotak Securities.

"Sudden gap ups and gap downs make it difficult to carry positions overnight."

Asian equities surged and futures indicated a more than 1% rally for U.S. shares. The fall in Treasury yields helped engineer a turnaround in risk sentiment. The 2-year Treasury yield declined to near 4% and the benchmark below 3.6%. Weaker than expected U.S. manufacturing data boosted demand for bonds.

India's equity gauge, the BSE Sensex advanced 2.3%, its best session in a month. Foreign flows into Indian equities turned negative in the last two weeks of September. Overall, overseas investors drew out $1.6 billion from Indian shares last month.

Indian equities and money markets are shut Wednesday. (Reporting by Nimesh Vora; Editing by Dhanya Ann Thoppil)


ę Reuters 2022
Stocks mentioned in the article
ChangeLast1st jan.
AUSTRALIAN DOLLAR / INDIAN RUPEE (AUD/INR) 0.06% 55.288787 Delayed Quote.2.21%
BRENT OIL -1.49% 85.9 Delayed Quote.11.13%
BRITISH POUND / US DOLLAR (GBP/USD) 0.23% 1.22858 Delayed Quote.-10.75%
CANADIAN DOLLAR / INDIAN RUPEE (CAD/INR) 0.04% 60.429 Delayed Quote.2.89%
CANADIAN DOLLAR / US DOLLAR (CAD/USD) -0.31% 0.7419 Delayed Quote.-5.76%
EURO (B) VS INDIAN RUPEE SPOT (EUR/INR) 0.46% 85.7995 Delayed Quote.-0.12%
EURO / US DOLLAR (EUR/USD) 0.05% 1.05325 Delayed Quote.-8.33%
INDIAN RUPEE / US DOLLAR (INR/USD) -0.30% 0.012284 Delayed Quote.-8.47%
NEW ZEALAND DOLLAR / US DOLLAR (NZD/USD) 0.63% 0.64084 Delayed Quote.-7.66%
S&P GSCI BRENT CRUDE INDEX -1.51% 728.2562 Real-time Quote.11.82%
SENSEX BSE30 -0.66% 62868.5 Real-time Quote.8.64%
US DOLLAR / INDIAN RUPEE (USD/INR) 0.36% 81.41 Delayed Quote.9.25%
WTI -1.34% 80.208 Delayed Quote.6.89%
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