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Rupee ended off intraday low, Euro steady vs. Dollar

Wednesday,   10-Oct-2018   05:32 PM (IST)

The Indian rupee ended the session off intraday low at 74.20/21 levels. After opening at 74.15/16 levels, rupee slipped to touch the intraday low of 74.2950/3050 levels today on slight oil importers demand. However, it reversed the losses to move up to 74.05/06 levels as dollar demand took a hit tracking lower U.S. Treasury yields, while local sentiment turned optimistic on hopes of fresh rupee-supportive measures soon. Today’s session saw several exporters stepping in to sell dollars after a media report yesterday cited government officials as saying the finance ministry and the central bank are in discussion over plans to raise money from NRIs to stem the rupee’s recent rout. Indian government bonds ended higher as the local currency rose for the first time in seven sessions, while the central bank's announcement of an open market purchase of bonds also boosted demand. Indian equities ended more than 1 percent higher today with shares of non-banking financial companies staging a recovery, while IT stocks closed lower as the rupee strengthened against the U.S. dollar. The benchmark BSE Sensex closed up 1.35 percent at 34,760.89. The broader NSE Nifty ended 1.54 percent higher at 10,460.10. In the forward segment 1mth, 3mth and 6mth annualized premia ended the day at 4.70%, 4.48% and 4.33% respectively.

The euro steadied near $1.15 and away from seven-week lows on Wednesday as a fall in U.S. Treasury yields took some steam out of the dollar’s recent run. Rising Treasury yields and concern about the sustainability of Italy’s public finances after the ruling parties proposed a budget criticized by the European Union and have fuelled another rally in the dollar in recent sessions, sending the greenback to a 1 1/2-month high on Tuesday. That rally paused in European trading on Wednesday, although analysts said it was likely to prove a temporary reprieve for the euro. Investors are betting that rising inflation pressures will keep the Federal Reserve, which unlike the European Central Bank is hiking rates, firmly focused on tighter policy, even as U.S. President Donald Trump took aim at policy makers’ hawkish inclinations. That means that short-term the dollar will continue to remain bid. The euro has lost its shine and therefore has too little to offer at present. On Wednesday, the dollar index was largely unchanged at 95.692, not far off 96.163 reached during the previous session - its highest level since Aug. 20. The euro hovered around $1.1486 having briefly pushed past $1.15 in Asian trading hours. Yields on Italy’s 10-year bonds have hit a 4 1/2-year high this week - reflecting concern about the country’s finances - despite encouraging comments from Italian Economy Minister Giovanni Tria. Elsewhere, other hard-hit currencies took advantage of the dollar’s pause, with the Australian dollar strengthening. Sterling hit a 3 1/2-month high versus the euro after reports that Britain and the EU were making progress towards a Brexit deal. The pound also rose against the dollar. Against the Japanese yen, the dollar edged higher, trading up 0.1 percent at 113.06 yen.