Rupee ended lower, Dollar higher vs. major currencies

Thursday,   23-May-2019   05:30 PM (IST)

The Indian rupee ended the session lower at 70.01/02 levels compared to its opening at 69.45/46 levels after touching the low of 70.09/10 levels as local shares slipped and dollar index strengthened, eclipsing early surge from Prime Minister Narendra Modi’s near-certain win in the national elections for a second time. Today the rupee market was very volatile. Rupee traded in the range of 69.3750-70.09 levels. Profit booking in local markets was seen as vote counting trend came in line with exit polls. Counting of votes in general elections of the world’s largest democracy is underway. Prime Minister Narendra Modis’ Bharatiya Janata Party is leading. Other Asian currencies ended mixed against the greenback Indian government bonds rose for a second session, as vote count suggested the incumbent government is set to return for a second five-year term. Indian shares ended lower after hitting record highs earlier in the session as Prime Minister Narendra Modi scored a thumping victory in the general elections. The benchmark BSE index closed down 0.76% at 38,811.39, with investors booking profits after it crossed 40,000 for the first time ever. The broader NSE index ended 0.69% lower at 11,657.05, having eclipsed 12,000 earlier in the session. In the forward segment 1mth, 3mth and 6mth annualized premia ended the day at 4.06%, 4.16% and 4.15% respectively.

The dollar hit its highest level in a month as economic and political uncertainties swept through Europe and Asia, pinning down most major currencies such as the euro and the yuan. Worries over German manufacturing, the effect of a trade war on Asian economies and deepening concerns over Brexit and upcoming European parliamentary elections all make it an uncomfortable time for many countries in Europe and Asia. While the United States is not without its own worries — a trade conflict with China being a major one — investors see the greenback as a relative safe haven. The dollar hit a high of 98.189 against a basket of six major currencies, its highest level since April 26, when it hit a two-year high of 98.33. Fuelling this dovishness is a softening of the global economy and there was further gloomy news on this front on Thursday. Activity in Germany’s services and manufacturing sectors fell in May, a survey showed on Thursday, reflecting the toll that unresolved trade disputes are having on Europe’s largest economy. Concerns over the global economy have been compounded by worries over political uncertainty, particularly in Europe. Britain’s political crisis deepened, with prominent Brexit supporter Andrea Leadsom resigning from Prime Minister Theresa May’s government on Wednesday, piling pressure on the British leader after a new Brexit gambit backfired and fueled calls for her to quit. This comes on a day in which European parliamentary elections are due to begin, with eurosceptic parties expected to poll well, worrying investors about the stability of the single currency. The euro inched down to hit a one-month low of $1.1133 in early trade while sterling was within a sliver of slipping below $1.26 for the first time since early January.