Rupee ended higher, Pound rose vs. dollar

Tuesday,   16-Oct-2018   05:34 PM (IST)

The Indian rupee ended the session higher at 73.46/47 levels compared to its opening at 73.8050/8150 levels as a reversal in increasing crude oil prices helped offset early losses. The price of US crude oil has eased back to the $71 per barrel mark after only a brief rally following the losses that took it from a high near $77 on October 3. Likely dollar inflows into domestic markets also supported the rupee, as investors awaited minutes of the Federal Reserve’s latest meeting, due to be released tomorrow. On the local front, narrowing of the trade deficit has also aided sentiments. Benchmark indices closed sharply higher on Tuesday with the Sensex gaining nearly 300 points as all sectoral indices ended in the green despite mixed global cues. The fall crude oil prices and rupee appreciation also boosted sentiment. The 30-share BSE Sensex rose 297.38 points to 35,162.48 and the 50-share NSE Nifty gained 72.30 points at 10,584.80. Indian government bonds rose today as crude oil prices fell and the local currency appreciated, reducing inflation risks. In the forward segment 1mth, 3mth and 6mth annualized premia ended the day at 4.78%, 4.44% and 4.30% respectively.

The pound rose above $1.32 on Tuesday after labor data beat expectations, but investors said doubts that a Brexit deal would be reached at a European Union summit this week would limit the currency’s advance. Less than six months before Brexit, negotiators from both sides are trying to figure out how to keep the UK frontier with the Irish Republic free of border checks once Britain leaves the EU in March. Some traders have been unwinding short positions on sterling, seeing potential for a breakthrough at Wednesday’s EU summit in Brussels. But no agreement is in sight. Still, the pound jumped on Tuesday after data showed that British workers’ basic wages rose at their fastest pace in nearly a decade over the summer months. The currency rose 0.4 percent to $1.3210 against the dollar. It gained 0.3 percent to 87.75 pence against the euro. It is not clear what EU leaders will be able to agree on at a dinner on Wednesday where UK Prime Minister May will give her view of the Brexit talks before they discuss among themselves how to proceed. Even if the Irish border issue is resolved, investors fear it could signal the start of another, potentially tougher battle for May with her own lawmakers who want a cleaner break from Europe.