Rupee ended flat, Pound higher vs. Dollar

Monday,   09-Sep-2019   05:22 PM (IST)

The Indian rupee ended the session flat at 71.70/71 levels compared to its opening at 71.70/71 levels as greenback purchases from foreign and private banks and higher oil prices offset gains tracking a rise in most Asian units. Rupee touched the high of 71.5050/5150 levels in morning deals today amid dollar’s decline following weak jobs data out of the world’s largest economy and exporter’s dollar selling. However, in later deals rupee slipped to touch the low of 71.73/74 levels on dollar buying by foreign banks while some private banks’ purchases on behalf of importers also weighed on rupee. Indian shares ended higher today led by gains in state-owned banks, as weak economic data from the United States and China stoked hopes of stimulus measures by major central banks. The broader NSE index ended 0.52% up at 11,003.05, while the benchmark BSE index finished 0.44% higher at 37,145.45. Indian government bonds rose for the first time in four days, as investors bought notes to benefit from the lower prices, while some fears of the government missing the budget gap target also eased. In the forward segment 1mth, 3mth and 6mth annualized premia ended the day at 4.35%, 4.09% and 4.19% respectively. Indian financial markets will be shut tomorrow on account of Muhharum.

Sterling rebounded from early lows on Monday and headed towards a five-week high on Monday as surprisingly strong data and growing optimism that Britain will not crash out of the European Union without a deal boosted demand for the British currency. British Prime Minister Boris Johnson will try for a second time on Monday to call a snap parliamentary election, but is set to be thwarted once more by opposition lawmakers who want to ensure he cannot take Britain out of the EU without a divorce agreement in place. Against the dollar, the pound gained 0.25% to $1.2321 after weakening 0.2% to $1.2233 earlier. It hit a one-month of $1.2353 last week. Versus the euro, it also gained 0.25% to 89.48 pence. Johnson last week failed to win enough support from lawmakers to call an early election and parliament also approved a bill which aims to block a no-deal Brexit at the end of October. That would force Johnson to seek a delay to Brexit. Sterling had a rollercoaster week during which it plunged to three-year lows before rebounding strongly as lawmakers voted to block a no-deal Brexit. In a note published late on Friday, strategists at Goldman Sachs raised the probability of a Brexit deal to 55% from 45% earlier and cut the likelihood of a “no deal” to 20% from 25% previously. However there is some uncertainty on whether the EU will allow an extension, while the Daily Telegraph reported Johnson has prepared plans to legally stop any Brexit extension. The uncertainty prompted hedge funds to unwind some of their negative bets against the British currency. Speculative short positions on the pound slipped in the latest week to 84,959, according to data from the U.S. Commodity Futures Trading Commission. The pound also received a rare boost from surprisingly strong economic data.