Rupee ended higher, Pound lower vs. Dollar

Thursday,   16-May-2019   05:23 PM (IST)

The Indian rupee ended the session higher at 70.0250/0350 levels compared to its opening at 70.27/28 levels after touching the high of 69.99/70.00 levels as foreign banks stepped up greenback sales, likely on behalf of corporate clients for inflows into local assets amid recovery in shares. Rupee traded in the range of 69.99-70.3250 levels today. Most local investors remained on sidelines ahead of the exit poll for India’s multi-phased general elections over the weekend. India’s trade deficit widened to $15.3 billion in April from $10.9 billion in the previous month, data released late yesterday showed. Traders suspected dollar inflows form Bharti Airtel’s 250 billion rupees ($3.60 billion) rights issue today. The issue closes for subscription tomorrow. Indian shares closed higher in volatile trade with gains led by media and IT stocks, while Bajaj Finance Ltd’s upbeat March-quarter earnings lifted sentiment. The benchmark BSE index closed up 0.75% at 37,393.48. The broader NSE index ended 0.9% higher at 11,257.10. Indian government bonds ended little changed today as investors slowed activity, awaiting the results of the nation's general election. In the forward segment 1mth, 3mth and 6mth annualized premia ended the day at 4.32%, 4.38% and 4.33% respectively.

The pound plumbed three-month lows on Thursday as the fate of Britain’s Prime Minister Theresa May and her Brexit deal hung in the balance, renewing fears of a disorderly departure from the European Union. May will face calls later in the day from her Conservative Party to set a clear date for standing down and could be warned that she faces a confidence vote next month. She is hoping to again put to parliamentary vote her thrice-rejected Brexit agreement but chances of it passing appear low. Eurosceptics in her party and its Northern Irish allies as well as opposition Labour lawmakers are expected to reject the deal, with a Labour spokeswoman knocking down speculation the party might abstain. Sterling was down for the ninth straight session, touching a three-month low of $1.2821 while against the euro slipped 0.13% to 87.4 pence, the lowest since February 19. May’s failure to reach a compromise on the Brexit deal with Labour has also seen implied sterling volatility tick higher, with the one-month contract rising to 7.4 vols, a five-week high. That’s a rise of one vol since the start of May. The currency is also being undermined by the global risk-off mood, with tariff tensions between China and the United States threatening to degenerate into a full-scale trade war.