Rupee ended lower, Dollar holding ground vs. major currencies

Wednesday,   06-Nov-2019   05:33 PM (IST)

The Indian rupee ended the session lower at 70.98/99 levels compared to its opening at 70.79/80 levels after touching the low of 71.0175/0275 levels on persistent dollar purchases by state-run banks and broad dollar strength following the release of strong U.S. services data. Rupee traded in the range of 70.7675-71.0175 levels today. U.S.-China trade related developments remained in center stage. Yesterday, two media reports indicated that U.S. was considering rolling back tariffs in an effort to reach a phase-one trade deal and recent comments from U.S. officials have indicated progress in negotiations. Asian currencies and equities ended mixed today. The onshore yuan was last up 0.1% at 6.9994 per dollar. The Chinese currency rose above seven to a dollar for the first time in three months yesterday on mounting expectations of the U.S and China reaching an interim trade deal. Buying in private banks and IT major Infosys propelled the benchmark S&P BSE Sensex to end at a record closing peak of 40,469.78, up 222 points or 0.55 per cent. The 50-share NSE index ended at 11,961, up 44 points or 0.37 per cent. Indian government bonds rose for the first time in three sessions, aided by short-covering, even as concerns that the federal government might miss its budgeted fiscal deficit target continued to dampen sentiment. In the forward segment 1mth, 3mth and 6mth annualized premia ended the day at 3.25%, 3.52% and 4.06% respectively.

The dollar held its ground against other major currencies on Wednesday, supported by rising hopes for a U.S.-China trade deal and an improving outlook for the U.S. economy. EUR/USD is trading closer to 1.1090 after German Factory Orders beat with a jump of 1.3% in September, services sector PMIs also exceeded expectations, Fed speakers, and US-Sino trade talks are eyed. GBP/USD is trading below 1.29, consolidating its losses. A gaffe by a senior minister has not dented PM Johnson's Conservatives lead in the polls. The BOE is awaited on Thursday. The pound was neutral on Wednesday as investors calculated the risks which the upcoming general election poses to Britain’s ability to sign a trade deal with the European Union before Jan. 31, its new deadline to exit the bloc. Traders also waited to see what the Bank of England (BoE) might have to say regarding the impact of Brexit on the British economy, after its meeting on Thursday. Uncertainty around Britain’s departure from the EU has left a strong mark on business confidence and weak economic data makes it increasingly likely that BoE’s next move will be to cut interest rates, rather than an increase. But money markets do not expect the central bank to cut rates in the near term until more clarity emerges on the political front.