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Rupee ended lower, Euro pulls back from highs vs. Dollar

Friday,   14-Sep-2018   05:34 PM (IST)

The Indian rupee pared the early gains and ended the session lower at 71.8450/8550 levels compared to its opening at 71.70/71 levels after touching the low of 71.9950/72.0050 levels as traders covered short dollar positions, wanting to square off open positions for the weekend, ahead of Prime Minister Narendra Modi’s upcoming economic review meeting. Dollar demand from oil companies also weighed on rupee. Rupee touched the high of 71.52/53 levels today on improved sentiment following lower-than-expected domestic and U.S. retail inflation. Overnight ease in crude oil prices also aided the currency. Indian shares ended higher for a second session as investors sentiment turned positive after government officials said Prime Minister Narendra Modi will hold a meeting later in the day with finance ministry to discuss economic issues. The broader NSE index closed 1.28 percent higher at 11,515.20 while the benchmark BSE index ended 0.99 percent firmer at 38,090.64. Inflation based on wholesale prices eased to a four-month low of 4.53 per cent in August. The Wholesale Price Index (WPI) based inflation stood at 5.09 per cent in July. In the forward segment 1mth, 3mth and 6mth annualized premia ended the day at 4.47%, 4.59% and 4.48% respectively. India's foreign exchange reserves fell to $399.28 billion as of Sept 7, compared with $400.10 billion a week earlier.

Euro pulled back from September 2018 highs of 1,1722 to trade around 1,1700 in the aftermath of the US inflation slowdown ahead of the US retail sales report later on Friday. The EUR/USD was boosted by the US inflation missing the market expectations while the ECB confirmed the path of asset purchasing program scale back while leaving growth forecast unchanged but sounded optimistic about prospects for inflation. The GBP/USD slips below 1.3100 on reports that the UK Labour Party will vote against the government's potential Brexit deal. Support from the opposition may be needed amid an open rebellion in the ruling Conservative Party. Earlier, BoE Governor Mark Carney said that recent data support faster pay rise in the UK. Carney was speaking in Dublin just one day after the MPC opted for wait-and-see approach leaving policy unchanged before the Brexit risk is sorted.