Rupee in range, Pound plagued by politics

Wednesday,   12-Dec-2018   12:31 PM (IST)

The Indian rupee is trading range bound and is currently quoted 72.05/06 levels (12:12 pm) in the afternoon deals amid a sharp bounce in oil prices and as investors remained cautious after the appointment of Shaktikanta Das as the new Reserve Bank of India governor. So far rupee traded in the range of 71.95-72.20 levels. Most Asian currencies trading higher as signs of easing U.S.-China trade tensions boosted risk appetite, with the Chinese Yuan leading gains. Benchmark indices are trading higher after the government moved quickly to calm markets and appoint a new central bank governor. Sensex trading nearly 360 points, while Nifty trading above 10,650. As per the technical indicators, range for USDINR pair for the remaining part of the day may be 71.60 -72.45 levels. Rupee has an immediate support at 72.18 levels. A breach of the same may see rupee at 72.32 followed by 72.43 and 72.55 levels. On the positive side rupee is likely to face resistance at 71.93 levels and if it is able to break the same then it may gain up to 71.82 levels followed by 71.68 and 71.55 levels. In the forward segment 1mth, 3mth and 6mth annualized premia are currently trading at 4.15%, 3.89% and 4.01% respectively.

Sterling was pinned near 20-month lows amid reports Conservative lawmakers could vote on a no confidence motion in May's leadership as soon as Wednesday night. The political ructions come a day after her decision to delay a vote in parliament on her Brexit deal for fear of a loss angered many in her party. The risk kept the pound at $1.2505, having shed 1.9 percent in the previous two sessions to a trough of $1.2483.The euro held firm at 90.56 pence, but was flat on the dollar at $1.1324. The dollar was still being viewed as the best of a bad bunch and stayed at 97.411 on a basket of currencies. The market is concerned that May could be replaced by a Brexit-supporter, increasing the chance of a no-deal scenario. Investors were also looking ahead to the U.S consumer price report later on Wednesday where an expected slowdown in headline inflation would only reinforce speculation of fewer rate hikes from the Federal Reserve. While market still expects the Fed will tighten at its policy meeting next week, Trump said the central bank would be "foolish" to do so. Wagers on a more restrained Fed helped gold stay near a five-month peak around $1,244.17 an ounce. Oil bounced after industry data showed a surprisingly large draw on stockpiles and amid talk a recent OPEC-led supply cut could support prices in 2019. Brent futures added another 65 cents to $60.85, while U.S crude rose 60 cents to $52.25 a barrel.