Rupee ended lower, Yen up vs. Dollar

Wednesday,   14-Aug-2019   05:22 PM (IST)

The Indian rupee ended the session lower at 71.27/28 levels compared to its opening at 71.00/01 levels after touching the low of 71.3450/3550 levels due to demand for dollar by state-run lenders for oil importers. Rupee touched the high of 70.8550/8650 levels early today after the U.S. delayed implementation of tariffs on some Chinese goods, boosting risk appetite and Asian currencies. Wholesale inflation eased to 1.08 per cent in July, from 2.02 per cent in the previous month, government data showed. Indian government bonds fell for the fifth consecutive session today, with benchmark yield rising most in two months, as investors remained worried over the expected fiscal and monetary responses to slowing growth. Indian stock indexes ended almost 1% higher on Wednesday, after Washington delayed tariffs on some Chinese imports, bringing relief to markets across Asia. The benchmark NSE index ended 0.95% higher at 11,029.40, while the benchmark BSE index closed down 0.96% at 37,311.53. In the forward segment 1mth, 3mth and 6mth annualized premia ended the day at 3.59%, 3.88% and 3.92% respectively.

The Japanese yen jumped to the day’s high on Wednesday as the United States bond yield curve inverted for the first time since 2007 as investors, gripped by worries of a looming global recession, fled to the safety of perceived safe-haven assets. An inversion of the U.S. Treasury yield curve — when short-dated bond yields fall more than their longer-dated counterparts— is considered as a classic recession warning and the drop in bond yields sent a chill through global markets after concerns of a U.S.-China trade dispute receded somewhat. The yen, which was already trading stronger on the day, received a further boost and headed towards a near 1-1/2 year high versus the U.S. dollar. Data on Wednesday showed that the Chinese economy continued to slow. Industrial output rose in July at the slowest pace in more than 17 years. Elsewhere, slumping exports sent Germany’s economy into reverse in the second quarter. The Japanese currency strengthened to 106.12 versus the dollar, its highest on Wednesday, up 0.6% on the day. Overnight, it had fallen to a one-week low after U.S. President Donald Trump backed off his Sept. 1 deadline for imposing 10% tariffs on remaining Chinese imports, delaying duties on cellphones, laptops and other consumer goods. The announcement came after renewed trade discussions between U.S. and Chinese officials. China’s offshore yuan gave up some of its earlier gains on Wednesday as weaker-than-expected economic data tempered the optimism generated by the U.S. decision to delay tariffs. GBP/USD is trading above 1.2050 after UK inflation beat expectations with 2.1% YoY. Ex-Chancellor of the Exchequer Hammond has said leaving without a deal would be a "betrayal."