Rupee ended almost flat, Pound lower vs. Dollar

Monday,   22-Jul-2019   05:23 PM (IST)

The Indian rupee ended the session almost flat at 68.9125/9225 levels compared to its opening at 68.90/91 levels. Rupee touched the low of 69.06/07 levels early today as bets of an aggressive rate cut from the Federal Reserve in July moderated while local shares declined to more than two-month lows. Rupee slipped today on dollar demand by oil and other importers and on fears of foreign fund outflow as local shares weakened. Rupee traded in the range of 68.8950-69.06 levels. Indian government bonds ended lower on Monday, with the benchmark yield posting its biggest rise in over a month, as remarks by the central bank governor tempered expectations of aggressive policy easing. The broader NSE Nifty ended 0.64% lower at 11,346.2, while the benchmark BSE Sensex closed down 0.8% at 38,031.13. Both indexes marked their worst closing levels since mid-May. In the forward segment 1mth, 3mth and 6mth annualized premia ended the day at 3.86%, 3.97% and 4.11% respectively. Meanwhile, most Asian equities and currencies ended lower, as bets of a 50-basis-point July Fed rate cut were scaled back after the Wall Street Journal reported the Fed was likely to cut rates by 25 bps this month, and may make further cuts in the future given global growth and trade uncertainties.

Sterling fell nearly half a percent on Monday with the outlook turning bleak as traders increased their bets on a no-deal Brexit before the result of the Conservative party’s leadership election. The pound’s weakness was in sharp contrast to the general calm in the developed market currency space and signalled growing unease among investors over the likelihood of Eurosceptic former foreign minister Boris Johnson becoming the next prime minister. The last votes to choose a new Conservative party leader are expected to be handed in late Monday, followed by an announcement mid-morning on Tuesday. Party activists choose the leader, expected to replace Theresa May as prime minister. The pound was last down 0.3% at $1.2467, not far from the 27-month low reached last week, having declined 1.8% against the dollar so far this month. Against the euro, it also fell to 89.98 pence.