Rupee ended flat, Pound lower vs. Dollar

Friday,   15-Feb-2019   05:29 PM (IST)

The Indian rupee ended the session flat at 71.22/23 levels compared to its opening at 71.23/24 levels. Rupee came off the day’s low to touch the high of 71.20/21 levels close to the end of the trading session on likely dollar selling by State Run Banks. Rupee today touched the low of 71.4250/4350 levels as rally in crude oil prices and higher concerns of geo-political risks following strong comments from Prime Minister Narendra Modi on yesterday’s terror attack weighed on the rupee. Rupee traded in the range of 71.20-71.4250 levels today. Indian shares recovered some of their early losses in late trade today but subdued global indicators and muted domestic earnings led to the markets ending in the red again. The benchmark BSE index marked its seventh consecutive fall, closing down 0.19 percent at 35,808.95.The broader NSE index ended 0.20 percent lower at 10,724.4. Indian government bonds fell this week, as uptrend in crude oil prices and heavy supply through end of next month outweighed gains stemming from a slower inflation rate that boosted rate cut hopes. In the forward segment 1mth, 3mth and 6mth annualized premia ended the day at 4.41%, 4.35% and 4.15% respectively. India's foreign exchange reserves fell to $398.12 billion as of Feb 8, compared with $400.24 billion a week earlier, the Reserve Bank of India said.

The pound hovered above a one-month low on Friday as investors mulled the consequences of a Brexit vote defeat in parliament for Prime Minister Theresa May, weakening her hand as she seeks to renegotiate her withdrawal agreement with Brussels. Though broader moves in the sterling markets were relatively muted, analysts said the latest defeat, although on a symbolic vote, indicates May does not have the support of her MPs as she attempts to convince the European Union to grant her concessions with less than six weeks before the March 29 exit date. Sterling was trading 0.1 percent lower at $1.2790, and not far from a one-month low of $1.2773 in the previous session. Against the euro, the pound was a shade stronger at 88.13 pence. Falling market expectations of an interest rate hike from the Bank of England this year are also weighing on the pound. Swap markets indicate a 28 percent probability of an interest rate hike compared to a third earlier this week. Derivatives markets painted a slightly more cautious picture with one-month implied volatility picking up from December lows and rising to 9 vol on Friday. Risk reversals, a market gauge of a ratio of puts to calls on a currency, indicate investors are leaning towards buying options to protect themselves against further currency downside.