Rupee ended higher, Pound higher vs. Dollar

Friday,   13-Sep-2019   05:27 PM (IST)

The Indian rupee ended the session higher at 70.9150/9250 levels compared to its opening at 70.9625/9725 levels after touching the high of 70.8550/8650 levels boosted by European Central Bank’s stimulus announcement and hint of progress on the US-China trade front. Rupee slipped to 71.1550/1650 levels in late afternoon deals today due to dollar purchases from some private and foreign banks. The Sensex and the Nifty closed higher led by a rally in banks and auto stocks, and notched up gains for the week as investors cheered signs of progress in the trade dispute between the United States and China. The Nifty closed 0.85% up at 11,075.90, while the Sensex ended 0.76% higher at 37,384.99. Indian government bonds fell for a second consecutive week, tracking higher U.S. Treasury yields and worries over fiscal slippage at home. In the forward segment 1mth, 3mth and 6mth annualized premia ended the day at 4.48%, 4.34% and 4.47% respectively.

The pound extended the last week’s dramatic rally on Friday as investors pounced on a media report that Northern Ireland’s largest political party had agreed to accept some European Union rules after Brexit. The report in the Times newspaper, which was swiftly denied by the party, encouraged the view that Britain and the EU can agree a deal to replace the Irish backstop, the main sticking point in negotiations between London and Brussels. Talk of an alternative to the Irish backstop, which Prime Minister Boris Johnson wants scrapped, comes as investors slash their short positions on the pound because of the receding risks of a no-deal Brexit. Having hit a three-year low below $1.20 last week, sterling has soared since the British parliament voted to stop Johnson’s government from taking Britain out of the European Union on Oct. 31. The British currency has now rallied more than 4% in just eight days, a significant reversal of fortunes from earlier this month when talk of a no-deal Brexit intensified. On Friday the pound strengthened 1% to as high as $1.2455, a seven-week peak. Against the euro, sterling added 0.7% to trade at 89.070 pence per euro. Credit Suisse on Friday became the first major bank to change its view on UK equities, pointing to the reduced chances of the country crashing out of the EU and saying that some equities look cheap compared with foreign counterparts. While the prospect of a no-deal Brexit on Oct. 31 has fallen sharply, Britain still faces months of uncertainty and the outcome is not clear. Johnson wants to call a general election but lawmakers have blocked his attempt to do so, saying they want to be sure he cannot push through a no-deal Brexit in the meantime. Opposition parties have vowed to block a no-deal Brexit but are divided about how to deliver Britain’s exit from the EU.