Rupee ended higher, Pound in narrow range vs. Dollar

Thursday,   11-Apr-2019   05:27 PM (IST)

The Indian rupee ended the session higher at 68.92/93 levels compared to its opening at 69.21/22 levels after touching the high of 68.8350/8450 levels on likely inflows into local assets and as minutes of the Federal Reserve’s latest meeting reinforced a dovish outlook. However, likely intervention by the central bank limited further rise in the local currency. Most Asian currencies ended little changed to lower against the greenback. Traders eyed flows from Bharti Airtel’s upcoming rights issue of 250 billion rupees ($3.63 billion) after it fixed Apr. 24 as record date for determining eligible shareholders. Flows from Vodafone Idea’s ongoing rights issue worth 250 billion rupees that kicked off yesterday was also closely watched today. Meanwhile, JSW Steel raised $500 million via dollar bonds yesterday. Indian shares ended marginally higher today as gains in energy stocks offset declines in the IT sector, but trade remained lackluster on the day the first phase of the national election began. The benchmark BSE Sensex closed up 0.06 percent at 38,607.01, while the broader NSE Nifty ended 0.11 percent higher at 11,596.7. Indian government bonds ended little changed, as investors refrained from placing bets ahead of the March retail inflation data due tomorrow. In the forward segment 1mth, 3mth and 6mth annualized premia ended the day at 5.53%, 5.02% and 4.69% respectively.

The pound stalled on Thursday and was stuck in a narrow trading range, reflecting uncertainty after European Union leaders extended the deadline for Britain to leave the bloc until October. A delay Brexit until Oct. 31 taken at a summit in Brussels means Britain will not crash out of the bloc on Friday without a treaty to smooth its passage. But with almost no clarity on when, how or even if Brexit will happen, conviction bets on sterling rising or falling sharply remain few and far between and the currency remains stuck just below $1.31. The immediate advantages for the currency, as well as UK and European equities, include the removal of a near-term, no-deal Brexit. But that is offset by the prospects of British Prime Minister Theresa May’s replacement, a general election and the threat to the British economy of prolonged uncertainty. Concern about big swings in the pound has dropped off significantly according to one-month implied volatility, which fell to a seven-month low. The pound has decision to been stuck this month between $1.30 and 1.32, with less volatility than in earlier periods of Brexit-related uncertainty. On Thursday it edged higher to $1.3098, while against the euro it slipped marginally to 86.14 pence per euro.