Rupee ended weaker, Dollar recovers mildly vs. major currencies

Tuesday,   16-Jan-2018   05:25 PM (IST)

The Indian rupee ended the session weaker at 64.0325/0425 levels compared to its opening at 63.60/61 levels after touching the low of 64.1050/1150 levels tracking sharp losses in the non-deliverable forwards trade, even as investor appetite for risk assets remained sour tracking higher crude oil prices. However, further losses in the rupee were limited on dollar sales by state-run banks, likely on behalf of the central bank. Rupee traded in the range of 63.59-64.1050 levels today. Most Asian currencies ended mixed against the greenback. India's trade deficit in December was at $14.88 billion, the highest since November 2014 and wider than November’s $13.83 billion, government data showed yesterday. Indian shares snapped a three-day gaining streak today, weighed down by energy stocks such as Reliance Industries Ltd, after data showed the country’s trade deficit widened in December. The state-run bank index fell 2.8 percent while the broader NSE index closed 0.38 percent down at 10,700.45. The benchmark BSE index ended 0.21 percent lower at 34,771.05. Indian government bonds slumped to a record low, with the benchmark bond yield ending at a 22-month high, as comments from a deputy governor at the central bank on lenders’ interest rate risks hurt appetite. In the forward segment 1mth, 3mth and 6mth annualized premia ended the day at 4.47%, 4.39% and 4.45% respectively.

The dollar continued to mildly recover from sharp losses posted against other major currencies on Tuesday, but gains were expected to remain limited and the greenback was still trading within close distance of a three-year trough. The dollar has been pressured lower by concerns the global economic recovery will outpace U.S. growth and prompt other major central banks, led by the European Central Bank to begin unwinding loose monetary policy at a faster pace than expected. Expectations that the ECB could soon start to scale back its monetary stimulus program received a boost on Monday after ECB Governing Council member Ardo Hansson said bond purchases could end in one step in September if the economy and inflation develop as expected. Meanwhile, the pound weakened after official data on Tuesday showed that UK consumer price inflation pulled back from a five-year high in December. Earlier Tuesday, data showed that New Zealand's business confidence index fell to -12 in the fourth quarter from a reading og 5 in the three months to September.