Rupee ended higher, Pound rose vs. Dollar

Wednesday,   12-Dec-2018   05:29 PM (IST)

The Indian rupee ended the session higher at 72.01/02 levels compared to its opening at 72.20/21 levels after touching the high of 71.8750/8850 levels on the back dollar selling in the market by foreign banks. Rupee opened lower today on rising bets over interest rate cuts after appointment of a former bureaucrat as the new governor of the central bank, seen as dovish by analysts, amid prediction of inflation easing going ahead. Most Asian currencies ended higher against the greenback amid positive development between U.S.-China over trade deal. Traders await the release the India’s November inflation data that will be released after market hours today. Indian shares marked a one-week closing high today driven by financials and automakers after the government appointed a new central bank governor quickly, amid state election results raising hopes of increased rural spending. Both the broader NSE index and the benchmark BSE Sensex ended 1.79 percent firmer. The NSE Nifty settled at 10,737.6, while the Sensex clocked out at 35,779.07. Indian sovereign bonds rose for a second day, on hopes slower inflation rate may lead to monetary policy easing and as the new central bank governor is seen as more dovish. In the forward segment 1mth, 3mth and 6mth annualized premia ended the day at 4.22%, 3.90% and 4.01% respectively.

Sterling rose on Wednesday as Prime Minister Theresa May vowed to fight a challenge to her leadership and warned rebels within her party that they risked delaying or even stopping Britain’s departure from the European Union. The pound had fallen to 20-month lows overnight after lawmakers in May’s Conservative party gathered enough support to trigger a no-confidence vote in her leadership. But it stabilized as some investors bet that May would win Wednesday’s vote and in the process isolate opponents in her party who want a clean, sudden break from the EU. The ballot, which is to be held between 1800 GMT and 2000 GMT on Wednesday, has further disrupted May’s Brexit plans, after she delayed a parliamentary vote on those plans on Monday. But less than four months until Britain is due to exit the European Union on March 29, May warned the Brexit backers that if they toppled her, the departure from the EU would have to be delayed and perhaps even stopped. The pound rose as much as half a percent to $1.2551 from below $1.25 earlier in the session. Against the euro, sterling rose 0.3 percent to 90.255 pence. Traders warned of more volatility for sterling regardless of the outcome - if May wins only narrowly, her position will remain vulnerable. She will also need to persuade her colleagues to back her Brexit plans when she seeks another parliamentary mandate, probably before Jan. 21. May is meeting with EU leaders this week to try and get her Brexit withdrawal agreement tweaked. The prime minister was expected to lose Monday’s cancelled vote badly, with opposition parties and many within her party angry at the deal she had agreed with Brussels. Without parliamentary approval, May’s Brexit plans are in disarray. A range of outcomes are possible, from a second referendum with the British public to a no-deal Brexit to a delayed Brexit.