Rupee ended higher, Pound falls vs. Dollar

Tuesday,   12-Feb-2019   05:24 PM (IST)

The Indian rupee ended the session higher at 70.70/71 levels compared to its opening at 71.1725/1825 levels after touching the high of 70.69/70 levels helped by banks’ greenback sales likely on behalf of their custodial clients who stepped up investments into local markets. Rupee opened flat and fell to the day’s low of 71.2150/2250 levels, before breaking the psychologically important level of 71 to touch 70.69/70 levels. Some market participants also speculated dollar inflows by a European telecom operator. Most Asian currencies also pared early losses to end little changed to higher against the greenback. Indian shares fell today with losses spread across IT and financial stocks, as caution prevailed ahead of a key inflation data due later in the day. The benchmark BSE Sensex fell for a fourth straight session, closing 0.66 percent lower at 36,153.62. The broader NSE Nifty declined 0.53 percent to 10,831.4. Indian government bonds ended little changed, as traders remained cautious ahead of the January retail inflation data, which may provide cues on future rate trajectory. In the forward segment 1mth, 3mth and 6mth annualized premia ended the day at 4.40%, 4.19% and 4.04% respectively. India’s retail inflation data for January and industrial production data for December will be released after market hours today.

The British currency fell against the dollar on Tuesday to a new three-week low, as doubts grow about whether Prime Minister Theresa May can convince the European Union to accept changes to her Brexit divorce deal. Time is running out for May to get the EU to amend the Brexit deal, and then get British lawmakers to back the agreement, before Britain is scheduled to leave the EU on March 29. That has heightened fears among financial investors of a no-deal and disorderly Brexit even if the majority of British lawmakers want to avoid one, reversing a recent recovery in sterling. May is expected to tell British lawmakers on Tuesday to hold their nerve over Brexit to force the EU to accept changes to the divorce deal. She is expected to seek parliamentary backing again for her withdrawal arrangement with Brussels by the end of February after losing an earlier bid badly. Investors want certainty, with the political turmoil weighing on consumer and business sentiment. The pound fell to $1.2831. Versus a broadly weaker euro, sterling held its own and was unchanged on the day at 87.695 pence per euro.