Rupee ended lower, Pound lower vs. Dollar

Thursday,   14-Feb-2019   05:30 PM (IST)

The Indian rupee ended the session lower at 71.16/17 levels compared to its opening at 70.87/88 levels after touching the low of 71.17/18 levels on dollar purchases by importers amid a spike in crude prices, while faster U.S. inflation rate lifted the dollar. Rupee had opened lower, but briefly rose to day's high of 70.80/81 levels on likely dollar inflows, before declining again to day's low of 71.17/18 levels. Rupee traded in the range of 70.80-71.17 levels today. Asian currencies also fell against the dollar. Wholesale prices in India eased to 2.76 percent in January, as compared to 3.80 percent in December, due to cheaper food and fuel prices, data released by the commerce and industry ministry showed. WPI Inflation data for November has also been revised to 4.47 percent from 4.64 percent earlier.  Indian shares fell today hurt by profit-taking in IT stocks, while energy stocks declined after the benchmark Brent crude oil prices climbed to three-month highs. The benchmark Sensex marked its worst run in over five months, closing down 0.44 percent at 35,876.22. The broader Nifty ended 0.44 percent lower at 10,746.05, having shed 2.9 percent in five sessions. Flows from the sale of the third tranche of so-called Bharat 22 exchange-traded fund was also anticipated today as subscriptions opened. New Delhi expects to get about 70 billion rupees from the sale, according to an official. Indian government bonds fell today, as continued gains in crude oil prices hurt demand ahead of heavy supply through next month end. In the forward segment 1mth, 3mth and 6mth annualized premia ended the day at 4.24%, 4.25% and 4.09% respectively.

Sterling fell to a four-week low on Thursday ahead of a parliamentary debate on Brexit that could give investors a sense of which way a forthcoming vote on Prime Minister Theresa May’s deal with Brussels will go. The parliamentary session is not expected to be a crunch event because May has promised that lawmakers will get another chance to express their opinion on Feb. 27. But with only six weeks to go before Britain is due to leave the European Union, markets are growing more anxious. Many traders are avoiding taking positions until a firm resolution on Brexit is secured. Lawmakers could on Thursday vote on a series of amendments, including one that calls for a second Brexit referendum. The Guardian newspaper reported that up to 10 frontbench opposition Labour MPs have threatened to resign if party leader Jeremy Corbyn does not support a pro-referendum amendment. If May did open the door to a second referendum, analysts say that sterling would bounce significantly. Turnover in the pound has declined in 2019 compared to its counterparts, with many hedge funds and day traders trying to move the market by trading technical levels and Brexit headlines. Despite jumpy cash markets, currency derivative markets were somewhat relaxed on the near term prospects for the pound. Implied volatility on the pound - or expected swings in the British currency - has fallen to a more-than three-month low of nearly 10 vol compared to 14 vol in early December. Positioning data indicated some degree of optimism on the currency. May is seeking changes to her deal with Brussels after it was roundly rejected by parliament on Jan. 15. She has said she wants to put a revised deal to a vote soon but has not yet set a date.