Rupee ended lower, Pound firm vs. Dollar

Tuesday,   19-Mar-2019   05:30 PM (IST)

The Indian rupee ended the day lower at 68.9675/9775 levels compared to its opening at 68.55/56 levels after touching the low of 69.0275/0375 levels as importers and corporates stepped up greenback buys. Outcome of the Federal Reserve’s two-day monetary policy meeting tomorrow also weighed on investor sentiment. Rupee touched the high of 68.3450/3550 levels today morning amid broad weakness on the dollar before the beginning of the two-day Federal Reserve meeting. Most Asian currencies ended higher against the dollar. The Reserve Bank of India last week said it will inject rupee liquidity for the longer duration through dollar-rupee buy/sell swap. The swap auction of $5 billion for tenor of three years will be held on Mar. 26. A large state-run bank was suspected to have bought dollars today in spot and paid in forwards. Indian shares rose for a seventh consecutive session on Tuesday, their longest winning streak since mid-December, boosted by gains in Energy and financial stocks. The benchmark BSE Sensex closed 0.70 percent higher at 38,363.47, while the broader NSE Nifty rose 0.61 percent to 11,532.40. Indian government bonds fell for the first time in three sessions, as investors booked profits to benefit from recent price gains and ahead of heavy supply of notes this week. In the forward segment 1mth, 3mth and 6mth annualized premia ended the day at 4.50%, 3.99% and 3.61% respectively.

The pound held firm near the day’s highs on Tuesday after data showed that British employers increased their hiring at the fastest pace in three years, while broad uncertainty on Brexit negotiations kept investors sidelined. While the pound has been little moved by British economic data in recent weeks, preferring to focus on the progress of Brexit negotiations, the data offered investors an excuse to consolidate their positions after a late selloff on Monday. The number of people in work surged by 222,000, helping to push down the unemployment rate to 3.9 percent, its lowest since the start of 1975, official data showed. Sterling got off to a volatile start to the week, shedding half a percent in late London trading on Monday, after John Bercow, the speaker of parliament, said Prime Minister Theresa May’s Brexit deal could not be voted on again unless it was substantially altered. The pound’s fall on Bercow’s ruling was quickly reversed, partly on confusion over the next steps and a reluctance to take directional bets but also because there was little disturbance to the running market assumption of “deal or delay”. Against the dollar, the pound is trading higher at $1.3280. It rallied to a 9-month high against the greenback to nearly $1.34 last week and is down less than a percent from those highs. Against the euro, the pound was broadly steady at 85.55 pence. Despite the latest political developments, various gauges of volatility indicators for the pound ticked lower on Tuesday, reflecting a broader drop in currency market volatility.