Rupee ended almost flat, Pound off lows vs. Euro

Tuesday,   11-Jun-2019   05:20 PM (IST)

The Indian rupee ended the session almost flat at 69.44/45 levels compared to its opening at 69.4475/4575 levels after touching the high of 69.3550/3650 levels as the Chinese Yuan rebounded from over six-month lows hit yesterday and as regional peers gained on comments from China’s central bank. Rupee broadly tracked Yuan’s movement for the day amid lack of any fresh trigger in the market. Rupee traded in the range of 69.3550-69.50 levels today. Traders are now awaiting India’s retail inflation and industrial output data, due tomorrow. Indian shares closed higher today as risk appetite remained firm after the United States shelved plans to impose tariffs on Mexico, while hopes of a rate cut by the Federal Reserve raised optimism among global investors. The broader NSE Nifty ended up 0.36% at 11,965.60, while the benchmark BSE Sensex closed 0.42% higher at 39,950.46. Indian government bonds ended higher for the first time in three sessions, amid value buying as traders expect inflation to undershoot the central bank’s target again. In the forward segment 1mth, 3mth and 6mth annualized premia ended the day at 4.20%, 4.02% and 4.07% respectively.

Sterling pulled away from five-month lows versus the euro on Tuesday after British wages in the three months to April rose faster than expected. The pound has been on the back foot in recent weeks as investors sit on the sidelines while the contest to succeed Theresa May as leader of the Conservative party and country heats up. On Monday, worse than expected data showing the British economy shrank 0.4% in April added to the pound’s worries. But sterling found some relief after wage growth in the three months to April came in at 3.1%. Employment growth slowed but the jobless rate held at its lowest since 1975, the official figures showed. Wage growth is outstripping inflation and the Bank of England has said it will need to raise interest rates - probably faster than the market expects - to keep inflation close to its 2% target. The pound recovered from five-month lows against the euro of 89.325 pence hit earlier in the session and rose 0.2% to 89.02 pence. Versus the dollar the British currency rose 0.2% to $1.2711 from around $1.2694 before the data. British Gilt yields rose around a basis point across the curve after the labour market data, moving away from 2-1/2 year lows hit last week. The exporter-heavy FTSE 100 trimmed gains after sterling rallied. Investors have largely ignored economic data releases in Britain recently, believing the BoE is unlikely to act until Britain decides how, when and even if it will leave the European Union. The United Kingdom is scheduled to exit the bloc on Oct. 31. Investors are concerned the next British prime minister could put the country on course for a no-deal Brexit after Theresa May failed to get her withdrawal agreement through parliament. Eurosceptic Boris Johnson is bookmakers’ favourite to win the contest.