Rupee ended lower, Dollar holding gains vs. major currencies

Monday,   25-Sep-2017   05:23 PM (IST)

The Indian rupee ended the session weaker at 65.10/11 levels compared to its opening at 64.84/85 levels after touching the low of 65.19/20 levels as weak shares and likely month-end dollar purchases by importers outweighed gains. Rupee had risen to 64.7250/7350 levels intraday on foreign banks’ dollar sales and amid expectations of inflows after the central bank tweaked limit for foreign investments in corporate bonds. Most other Asian currencies were mixed against the dollar. Indian shares ended lower today tracking weakness in Asian peers, with index heavyweights ITC Ltd and HDFC Bank Ltd dragging down the indexes. The Sensex fell 0.93 percent to 31,626.63, while the Nifty ended 0.92 percent lower at 9,872.60. Both the indexes dropped more than a percent during the session and are down for the fifth straight day. Indian government bonds rose, as investors bought notes after a sharp fall in prices over the past few weeks. In the forward segment 1mth, 3mth and 6mth annualized premia ended the day at 4.33%, 4.15% and 4.05% respectively.

The dollar held onto gains against other major currencies on Monday, as markets were still recovering from the weekend's elections in Germany and New Zealand and as concerns over tensions between the U.S. and North Korea seemed to subside. EUR/USD slid to 1.1868 as Germany's federal election on Sunday showed growing support for a far-right party. Chancellor Angela Merkel won a fourth term in office on Sunday but will have to build a coalition to form a government as Conservatives lost support in the face of a surge by the anti-immigration Alternative for Germany (AfD). Earlier Monday, data showed that German business confidence edged lower in September. However, the reading remained close to the highest level on record, suggesting momentum in the euro zone's biggest economy remains strong. GBP/USD recovering from moderate losses posted on Friday after UK Prime Minister Theresa May gave few new indications on how Brexit will proceed. May proposed a transition period of around two years after the UK leaves the European Union, during which time access to the single market will continue on current terms. Following May's speech, ratings agency Moody's downgraded Britain's credit rating to Aa2, saying government plans to reduce debt had been knocked off course and that Brexit would weigh on the economy. The ruling National Party won the largest number votes, but neither of the major parties won enough seats to gain a majority in parliament, forcing a round of coalition talks that could last days or weeks.