Rupee ended higher, Pound recovers vs. Dollar

Tuesday,   11-Dec-2018   05:32 PM (IST)

The Indian rupee recouped early losses and ended the session higher at 71.85/86 levels compared to its opening at 72.4625/4725 levels after touching the high of 71.6850/6950 levels as banks stepped up greenback sales after likely intervention by the central bank to trim losses following a sudden resignation by the RBI governor. Recovery in local shares also helped the rupee to trim some losses. Rupee has opened sharply lower today at 72.4625/4725 levels led by the surprise resignation of the nation’s central bank governor that led to a plunge in all local asset classes. Indian shares closed higher on the back of IT and financial stocks today, recovering from sharp early losses triggered by the abrupt exit of the central bank governor and ahead of key state election results. The broader NSE index closed 0.58 percent higher at 10,549.15, while the benchmark BSE index ended 0.54 percent firmer at 35,150.01. Indian government bonds rose, as investors bought notes to benefit from a slump in prices earlier today stemming from the abrupt resignation of the central bank governor. In the forward segment 1mth, 3mth and 6mth annualized premia ended the day at 4.32%, 3.92% and 4.05% respectively.

The British pound crawled off 20-month lows on Tuesday as Prime Minister Theresa May sought support from European leaders to change her Brexit deal, with investors weighing chances of a chaotic British exit from the European Union. May met Dutch Prime Minister Mark Rutte and will meet German Chancellor Angela Merkel in a last ditch bid to save her deal before an EU summit on Dec. 13-14. The British premier on Monday called off a parliamentary vote on her Brexit agreement to seek more concessions. That thrust Britain’s exit from the EU into the unknown and saw the pound plunge to its lowest level since April 2017. Possible outcomes include a disorderly no-deal Brexit, another referendum on EU membership, or a last-minute renegotiation of May’s deal with Brussels. Sterling was up 0.4 percent at $1.2615, a recovery of sorts after falling 1.6 percent against the dollar on Monday to as low as $1.2507. Weakness in sterling helped nudge the euro up 0.3 percent to $1.1387. Concerns over protests in France against inequality and President Emmanuel Macron’s economic reforms have limited the euro’s gains recently. Investors in the euro are also focused on the European Central Bank’s economic assessment of the euro zone, due on Thursday.