Rupee trades in green at 83.23 to a dollar in sync with gains in peer Asian currencies

Market sentiment has become fragile due to Israeli-Hamas clashes, leading to currency market risk aversion amid heightened geopolitical tensions and uncertainty.

The rupee opened marginally higher against the US dollar on October 10, in line with gains in peer Asian currencies.

At 9.05am, the home currency was trading at 83.23 to a dollar, up 0.05 percent from its previous close of 83.27.

“Yesterday, the RBI was keeping the rupee at 83.25 levels while dollar outflows dominated the scene. The RBI may continue to sell dollar, protecting the rupee as FPI outflows and oil companies buying keeps dollar well bid,” said Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP.

Market sentiment has become fragile due to Israel-Hamas clashes, leading to currency market risk aversion amid heightened geopolitical tensions and uncertainty.

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Asian currencies gained on dovish remarks from the Federal Reserve. Fed Vice Chair Philip Jefferson noted his awareness of financial conditions and bond yields in policy decisions. Fed Official Lorie Logan suggested rising treasury yields might reduce the need for rate hikes, as per Bloomberg.

“While the rebound in risk sentiment can be attributed to the perceived shift in the Fed’s stance and US implied rates fell across the curve, investors recalibrated their portfolios, leading to a weakened dollar and a rise in risk assets. However, investors will continue to closely monitor developments and assess the evolving landscape,” said CR Forex in its note.

Traders are keeping an eye on upcoming data that will influence momentum: US CPI, PPI, and Federal Reserve meeting minutes.

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Asian currencies were trading higher. Taiwan dollar rose 0.52 percent, South Korean won gained 0.28 percent, Thai Baht up 0.21 percent, Philippines peso 0.17 percent, China Offshore advanced 0.1 percent. Among losers, Malaysian ringgit and Japanese yen fell 0.07 percent each.

The dollar index, which measures the US currency’s strength against major currencies, was trading at 106.07, down 0.02 percent from its previous close of 106.08.