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Rupee ended higher, Pound higher vs. Dollar

Tuesday,   24-Mar-2020   05:30 PM (IST)

The Indian rupee ended the session higher at intraday high of 75.88/89 levels compared to its opening at 76.07/08 levels on upbeat regional cues and a pullback in the dollar index after the Federal Reserve ramped up measures to combat the impact of the coronavirus. Rupee slipped to 76.2350/2450 levels today on foreign banks’ dollar purchases. Most Asian currencies and equities rose after the Fed announced that it will buy potentially unlimited amount of assets and agency mortgage-backed securities to offset the immediate economic hit from the virus. Further, the Fed said it will back purchases of corporate bonds and announced credit facilitates to support new bond and loan issuance to provide liquidity. The Fed’s measures came amid a worsening global and U.S. economic outlook. Indian federal government bonds ended higher as trading volumes plummeted with most market participants staying away due to the coronavirus-induced lockdown, but open market bond purchases from the central bank somewhat aided sentiment. After a Monday mayhem the benchmark indices ended in the green but off day's high amid some measures announced by the Finance Minister. The Sensex was up 692.79 points or 2.67% at 26674.03, while Nifty was up 190.80 points or 2.51% at 7801.05. In the forward segment 1mth, 3mth and 6mth annualized premia ended the day at 8.70%, 5.84% and 4.99% respectively. Indian money markets will be closed tomorrow on the occasion of Gudi Padwa.

Britain’s pound rallied more than 1.5% against the dollar and found firmer ground against the euro on Tuesday, winning a respite from a battering in recent days. Sterling, along with most currencies, has seen a massive wave of selling against the U.S. dollar, the world’s most liquid currency and the safe haven of choice when confidence evaporates from financial markets. It has also been hurt by concerns over Britain’s approach to dealing with the coronavirus outbreak, which has seen a more staggered disruption to economic and everyday life than in other countries. Late on Monday, Prime Minister Boris Johnson ordered Britons to stay at home to halt the spread of coronavirus, imposing curbs on everyday life without precedent in peacetime. The dollar slipped for a second consecutive day on Tuesday after the U.S. Federal Reserve unveiled fresh measures to supply precious liquidity into funding markets, sending risky currencies such as the Australian dollar soaring. The Fed announced unlimited quantitative easing and programs to support credit markets on Monday in a drastic bid to backstop an economy reeling from emergency restrictions on commerce to fight the coronavirus.