Raise rupee on Fed’s dovish stance, including rates from Goldman Sachs

MUMBAI: The rupee edged higher against the US dollar on Monday, led by lower Treasury yields near maturity on hopes that the Federal Reserve may take a less dovish stance on interest rates.
The rupee opened at $81.76 against $82.04 in the previous session.
after failure Silicon Valley Bank, futures almost priced in a 50 basis point Fed rate hike at the March 21-22 meeting. Some economists expect the US central bank not to raise rates at all.
“Given the recent turmoil in the banking system, we do not expect the (FED) to raise rates at its March 22 meeting with significant uncertainty about the path beyond March,” Goldman Sachs said in a note to clients.
The Fed, the US Treasury and the Federal Deposit Insurance Corporation (FDIC) have taken steps to prevent the SVB’s collapse from spreading further.
US stock futures rose 1.8% in Asian trade, with the 2-year Treasury yield down 20 bps and the dollar index falling below 104.
It remains to be seen if the dollar is weak due to lower US yields, but if the risk aversion and safe-haven element intervenes now, it will translate into strength for the rupee, he said. Srinivas PuniManaging Director of QuantArt Market Solutions.

Leave a Reply

Your email address will not be published. Required fields are marked *