Friday, March 24, 2023

Rupee up with Goldman Sachs on dovish Fed stance bets – Usky News

MUMBAI: The rupee opened higher against the US dollar on Monday tracking fall in near-maturity treasury yields on hopes of a less aggressive stance on interest rates by the Federal Reserve.
The rupee opened higher at 81.76 per dollar from 82.04 in the previous session.
after the failure of Silicon Valley Bank, futures have virtually eliminated the possibility of a Fed rate hike of 50 basis points at its March 21-22 meeting. Some economists expect the US central bank not to hike at all.
Goldman Sachs said in a note to clients, “In light of recent stresses in the banking system, we do not expect a (Fed) rate hike at the March 22 meeting with considerable uncertainty about the way forward.” “
The Fed, the US Treasury and the Federal Deposit Insurance Corporation (FDIC) took steps to avoid the wider fallout of the SVB collapse.
US equity futures rose 1.8% in Asia trade, the 2-year Treasury yield fell 20 bps and the dollar index settled below 104.
While the dollar is weak due to fall in US yields, it remains to be seen whether the rupee’s strength translates as an element of risk aversion and safe haven-hunting will now be in the mix, said Srinivas PuniManaging Director, QuantArt Market Solutions.


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