Rupee ended higher, BOE leaves policy rate unchanged

Thursday,   07-Nov-2019   05:39 PM (IST)

The Indian rupee ended the session higher at 70.9550/9650 levels compared to its opening at 71.05/06 levels after touching the high of 70.8950/9050 levels as optimistic remarks by China about a potential trade deal with the U.S. offset early decline stemming from fears of delay in the U.S.-China trade truce. There were corporate dollar sales in the market. Rupee traded in the range of 70.8950-71.11 levels today. Equity markets witnessed yet another record-breaking session on Thursday as investor sentiment remained buoyed on Rs 25,000 crore booster dose for the realty sector. India’s federal cabinet yesterday approved an earlier plan to set up a fund, initially worth 250 billion rupees ($3.52 billion), to complete stalled realty projects in the affordable and middle-income housing segments and support the real estate sector. The S&P BSE Sensex closed at a fresh closing peak of 40,653.74, up 184 points or 0.45 per cent. The broader Nifty50 index closed above the 12,000-mark at 12,016, up 50 points or 0.42 per cent. Indian government bonds ended lower on an uptick in U.S. Treasury yields and crude oil prices, as global risk sentiment improved after China hinted at progress towards a trade deal with the United States. In the forward segment 1mth, 3mth and 6mth annualized premia ended the day at 3.10%, 3.44% and 3.96% respectively.

In a widely expected decision, the Bank of England's Monetary Policy Committee held the policy rate unchanged at 0.75% with a unanimous vote. The asset purchase facility remained steady at €435 billion as well. On a dovish note, 2 members of the Monetary Policy Committee voted to cut the policy rate. With the initial market reaction, the GBP/USD pair came under strong bearish pressure and was last down 0.2% on the day at 1.2825. The dollar was holding steady against a currency basket on Thursday as investors continued to watch developments in Sino-U.S. trade negotiations. Washington and Beijing must simultaneously cancel some existing tariffs on each other's goods for both sides to reach a "phase one" trade deal, the Chinese commerce ministry said on Thursday. China indicated it was ready to negotiate how much tariffs should be canceled. The comments came after reports on Wednesday that a meeting between U.S. President Donald Trump and Chinese President Xi Jinping to sign an interim trade deal could be delayed until December. The two sides have imposed tariffs on each other's goods in a 16-month long trade war that rippled across financial markets, slowed global investments and growth. Negotiations have been fractious, making an agreement far from certain. EUR/USD has been recovering from the lows as China's commerce ministry expressed optimism about trade talks. Earlier, the common currency struggled with downbeat German data.