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Rupee recovers, Sterling steady Vs dollar

Wednesday,   13-Mar-2019   12:32 PM (IST)

The Indian rupee is trading higher at 69.60/61 levels (12:15 pm) in the afternoon deals after touching a low of 69.77/78 levels, as dollar sales by foreign banks and exporters offset weak Asian cues. Dollar sales by a European lender and a German bank likely on behalf of their custodial clients helped rupee recoup early losses. Dollar sales by exporters are further helping the rupee. Indian government bonds fell in early trade as local retail inflation gained pace in February, while uncertainty over continuation of open market purchases in March also led to caution among investors. Benchmark equity indices are trading flattish to positive. As per the technical indicators, range for USDINR pair for the remaining part of the day may be 69.40-70.10 levels. Rupee has an immediate support at 69.84 levels. A breach of the same may see rupee at 69.98 followed by 70.18 levels. On the positive side rupee is likely to face resistance at 69.59 levels and if it is able to break the same then it may gain up to 69.42 levels followed by 69.34 levels. In the forward segment, 1mth, 3mth and 6mth annualized premia are currently trading at 4.59%, 4.33% and 4.01% respectively.

Sterling is trading steady against the dollar ahead of the House of Commons vote on a no-deal Brexit later today, which could open the door for a second referendum or even no Brexit. There is also the possibility of an extending article 50 but that may come at a price of 39 Bln GBP. However, before the vote begins, traders may keep a peripheral view on Eurozone industrial production with their main focus likely on preliminary US durable goods orders for January. Estimates for the latter are currently pegged at -0.40% with the previous at 1.20. Slower global growth from the US-China trade spat along with increasing risk out of Europe may continue to weigh on risk appetite and make consumers less optimistic. Meanwhile, most emerging Asian currencies traded flat to lower on Wednesday, with the South Korean won weakening the most as investors looked for signs of a breakthrough in U.S.-China trade negotiations. U.S. Trade Representative Robert Lighthizer said on Tuesday he hopes the United States and China are in the final weeks of talks to secure a deal to ease a trade war between the world's largest economies, but cautioned that major issues remained. Investors will also keep a close watch on key industrial output data from China for the first two months of the year due on Thursday.