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Rupee ended higher, Pound lower vs. Dollar

Thursday,   10-Jan-2019   05:30 PM (IST)

The Indian rupee ended the session higher at 70.4125/4225 levels compared to its opening at 70.46/47 levels after touching the high of 70.32/33 levels as exporters’ greenback sales in late trade and dovish minutes of the Federal Reserve’s latest meeting erased early losses from overnight spike in crude oil prices. Rupee today dropped to touch the low of 70.6550/6650 due to dollar buying by foreign banks and importers. Other Asian currencies advanced against the greenback. Indian shares snapped four sessions of gains to settle lower on Thursday as investors remained cautious ahead of technology giant Tata Consultancy Services’ results. The benchmark BSE Sensex closed the session 0.29 percent lower at 36,106.41, while the broader NSE Nifty ended down 0.31 percent at 10,821.60. Indian government bonds ended little changed in a thin trading session, as elevated crude oil prices and fiscal worries continued to weigh on investor appetite. In the forward segment 1mth, 3mth and 6mth annualized premia ended the day at 3.98%, 4.08% and 4.09% respectively.

Sterling hit a one-week low against the euro and dipped against the dollar on Thursday after British Prime Minister Theresa May lost two Brexit-related votes in two days, fuelling speculation she will soon face a general election. Britain’s main opposition Labour Party will demand a general election if May loses a vote in parliament over her Brexit plans next week, its leader, Jeremy Corbyn, is expected to say on Thursday. The by the possibility of a Corbyn government implementing high-spending policies weakened the British currency. But expectations for sterling volatility fell as Wednesday’s vote also appeared to reduce the chance of a no-deal Brexit. British lawmakers have demanded that the government come up with a plan B within days if May loses the vote on her Brexit deal on Jan. 15. Sterling reached a one-week low against the euro of 90.53 pence before settling around 90.3 pence, down 0.1 percent on the day. It also dropped 0.20 percent against the dollar to $1.276. Even so, the risk that sterling will fall against the dollar was deemed the lowest in over four months, according to one-month risk reversals, a gauge of market positioning. Expectations for sterling price swings have also diminished in the last few sessions, with investors now expecting less implied volatility over a one-month period. The last time a vote on May’s Brexit deal was scheduled, in mid-November, the measure of sterling volatility climbed to a two-year high, even though the vote was eventually postponed. It’s now set for Jan. 15.