Rupee ended lower, Dollar higher vs. major currencies
Monday,
19-Aug-2019
05:30 PM (IST)
The Indian rupee ended the session lower at 71.43/44 levels compared to its opening at 71.17/18 levels after touching the low of 71.4725/4825 levels on likely custodian outflows and as local shares retreated, erasing most of its early gains. After opening at 71.17/18 levels rupee briefly rose to 71.0525/0625 levels today on dollar selling by foreign banks. However, rupee dropped back on dollar purchases by foreign and private banks ahead of rupee’s daily reference rate fixing. Reserve Bank of India Governor Shaktikanta Das said today that India’s economy is facing several domestic and global challenges, and emphasised the need for quicker monetary transmission by banks to help support slowing growth. Indian shares came off their session peak to close a tick higher on Monday, as strength in pharmaceutical stocks was largely offset by declines across the banking and auto sectors. The broader NSE Nifty ended 0.07% higher at 11,053.90, while the benchmark BSE Sensex gained 0.14% to finish at 37,042.49. In the forward segment 1mth, 3mth and 6mth annualized premia ended the day at 3.53%, 3.80% and 3.89% respectively.
The U.S. dollar was hovering near two-week highs against a currency basket on Monday as U.S. Treasury yields bounced back from recent lows amid hopes that major economies will seek to prop up slowing growth with fresh stimulus. The U.S. dollar index not far from the two-week high of 98.20 reached on Friday. The 10-year U.S. Treasury yield stood at 1.57%, having pulled away from a three-year trough of 1.47% marked last week in the wake of global slowdown fears. Falling yields last week caused the two-year/10-year Treasury curve to invert for the first since 2007, a phenomenon widely regarded as a recession signal that puts the Federal Reserve interest rate deliberations into focus. Powell will deliver a speech on Friday at an annual meeting of central bankers in Jackson Hole, Wyoming. Powell said after the Fed lowered rates in July that the easing was not the start of a series of cuts. But market expectations for the Fed to cut rates by another 25 basis points at the next policy meeting in September have increased. The Chinese Yuan was slightly lower after U.S. President Donald Trump said he was not ready yet to make a trade with China. Traders were also cautious ahead of the debut of China's new benchmark lending rate on Tuesday, which was announced at the weekend. The People’s Bank of China on Saturday unveiled interest rate reforms to help lower borrowing costs for companies and support slowing growth, which has been hit by the trade war with the U.S.
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