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Rupee ended lower, Yen remains higher vs. Dollar

Tuesday,   13-Aug-2019   05:26 PM (IST)

The Indian rupee ended the session lower at intraday low of 71.40/41 levels compared to its opening at 71.19/20 levels tracking a slump in shares amid trade concerns and political uncertainty in some regions. Rupee briefly rose to 71.0250/0350 levels early today on dollar sales by state-run banks. However, rupee could not sustain the gain and dropped back on dollar buying in the market. Asian equities and currencies ended lower as investor appetite for risk assets was dented amid a plunge in the Argentine peso, ongoing protests in Hong Kong and expectations of a delay in the U.S.-China trade deal. Indian shares slipped today dragged lower by telecoms and automotive stocks, as investors remained wary in the absence of any announcement about a government fiscal stimulus package. The S&P BSE Sensex and the Nifty50 fell 866.67 points and 244.3 points from day's highs to hit a low of 36,888.49 and 10,901.60 respectively in the intra-day trade. The Sensex closed 624 points, or 1.66 per cent, lower at 36,958 levels The Nifty50, too, breached the psychological level of 11,000 to settle 184 points, or 1.65 per cent, lower at 10,926 marks. Indian government bonds fell for the fourth straight session, posting the longest losing streak in nearly a year, as rupee fell to a six-month low, hurting investor demand. In the forward segment 1mth, 3mth and 6mth annualized premia ended the day at 3.68%, 3.82% and 3.88% respectively. Traders now await India’s retail inflation for July, due post market hours today.

The Japanese yen remained near seven-month highs on Tuesday and the U.S. dollar rallied, as investors unnerved by the Sino-U.S. trade war, protests in Hong Kong and a crash in Argentina’s peso currency sought safety. Investors have flocked to the yen amid an escalating trade war between China and the United States and worries about a global economic slowdown. The Japanese currency, along with the dollar and Swiss franc, is a safe haven in times of uncertainty. The yen got a fresh boost from growing unrest in Hong Kong and surprise election results in Argentina that led to a rout in the country’s currency, the peso, and stocks and bonds. U.S. Treasury yields have declined steadily recently, and the spread between U.S. and Japanese benchmark 10-year yields has shrunk to its narrowest since November 2016. The yen was at 105.18 per dollar. EUR/USD is trading around 1.1200 after the German ZEW Economic Sentiment survey plunged to -44.1 points, below expectations. The US dollar is gaining ground on a risk-averse mood. GBP/USD is trading above 1.2050 but still down on the day. UK wages beat expectations by rising by 3.9% when excluding bonuses but the unemployment rate rose unexpectedly. Brexit concerns weigh.