Rupee ended lower, Pound edges lower vs. Dollar

Friday,   22-May-2020   03:07 PM (IST)

The Indian rupee ended the session lower at 75.95/96 levels compared to its opening at  75.72/73 levels after touching the low of 75.96/97 levels tracking losses in regional equities and currencies after China moved to increase control over Hong Kong, prompting U.S. lawmakers to propose sanctions. An interest rate cut by the country’s rate-setting panel also weighed on sentiment. The Monetary Policy Committee in a surprise move slashed the key policy rate by 40 basis points to 4.40% to help the economy battered by the coronavirus pandemic. The reverse repo rate was also cut by a similar quantum to 3.35%. Asian currencies were sharply lower. Equity markets dropped over 1 per cent after RBI Governor Shaktikanta Das said the GDP growth in FY21 is expected to be in negative territory. At 2:07 pm, the S&P BSE Sensex was trading at 30,649, down 284 point, while the broader Nifty50 was at 9,026 down 80 point. In the forward segment 1mth, 3mth and 6mth annualized premia ended the day at 3.42%, 3.53% and 3.62% respectively.Indian government bond yields fell this week, with the benchmark yield at its lowest in over eleven years, after the country’s rate-setting panel in a surprise move today slashed the key policy rate by 40 basis points, while sticking to its accommodative stance.

Sterling edged lower on Friday against both the U.S. dollar and the euro as fresh data showed retail sales fell by a record 18% as the coronavirus crisis hammered the economy and while U.S.- China tensions boosted demand for the dollar. British retail sales fell by the most on record in April due to the lockdown. In addition, Britain’s government borrowed more in April than it has in any month on record, pushing public debt close to 100% of gross domestic product, the highest since 1963, data showed on Friday. The data added to a overall lack of good news for the pound, strategists at ING wrote in a note to clients, as Brexit continues to deter pound investors, after the latest round of negotiations ended with scant progress last week. A drop in inflation fuelled speculation this week that the Bank of England might cut interest rates below zero. British five-year government bond yields fell below zero for the first time on Thursday, a day after Britain sold its first bond with a negative yield. Sterling weakened for a third consecutive day against a strong dollar as U.S.-China tensions boosted demand for safe-haven currencies. The pound was last down 0.45% versus the dollar at $1.2169 and down 0.02% against the euro at 89.60 pence. The pound is in the lower band of its recent trading range, as Britain remains one of the countries hit hardest by the pandemic. The UK’s death toll from COVID-19, the disease caused by the new coronavirus, has topped 43,000, the worst in Europe. Britain’s finance ministry said more than 1.8 million mortgage payment holidays had been taken up since March. The scheme had been due to end in June but was extended for another three months.