Rupee ended up, Pound lower vs. Dollar

Thursday,   28-May-2020   02:44 PM (IST)

The Indian rupee ended the session higher at 75.7450/7550 levels compared to its opening at 75.90/91 levels as persistent dollar sales by foreign banks amid likely greenback inflows trimmed early losses due to a broad decline in regional currencies. Potential flows from Kotak Mahindra Bank’s fund raising via a qualified institutional placement and flows from Reliance Industries’ digital arm Jio Platforms that has sold stakes to multiple foreign investors over the last one month supported the rupee throughout today’s trading session. However, the impact of the flows was offset by a broad decline in most Asian currencies amid rising tensions between the U.S. and China over Hong Kong. Indian government bond yields ended largely unchanged for the second straight session, as traders awaited fresh triggers and clarity on open market operations by the central bank. Equity markets were trading over one per cent higher today, lifted by rally in financials for second straight day, ahead of the expiry of futures and options contracts of May series. At 2:12 pm, the S&P BSE Sensex was trading at 32,038, up 432 point, while the broader Nifty50 was at 9,446 up 131 point. In the forward segment 1mth, 3mth and 6mth annualized premia ended the day at 3.49%, 3.55% and 3.71% respectively.

GBP/USD is trading below 1.2250, on the back foot. Britain's refusal to extend the Brexit transition period and the BOE's open door to negative rates weigh on the pound. US data and political developments around the Cummings scandal are eyed. Sterling fell 1% after Britain told the European Union on Wednesday it needed to break a fundamental impasse to clinch a Brexit trade deal by the end of the year. British Prime Minister Boris Johnson will resume Brexit talks in person in Brussels next month, the Times newspaper reported on Thursday. The government insists it will not extend the transition period. The pound is near its lowest levels in more than three decades, as it grapples with Brexit, the prospect of negative interest rates in Britain, a deep recession and a growing pile of debt. Bank of England Governor Andrew Bailey said on Wednesday that the central bank was right to consider cutting rates below zero to give the economy an extra boost, but that careful thought would need to be given to the side-effects of doing so. Against the dollar, the pound held near Wednesday’s close at $1.2248, having lost 7.5% of its value so far this year. Versus the euro — which was strengthened by proposals for a bigger-than-expected EU-wide recovery fund — the pound was up less than 0.1% since New York’s close, at 89.76 pence. It had held steady overnight and strengthened in early London trading. China's National People Congress (NPC) approves the National Security Bill for Hong Kong. The security law would punish secession, subversion of state power, terrorism, and acts that endanger national security, as well as allow mainland security agencies to operate openly in Hong Kong. Security law for the city is fuelling fears in Hong Kong and beyond that Beijing is imposing its authority and eroding the high degree of autonomy of Hong Kong. Market awaits the Global response including USA’s to this move by China. Trump had already threatened to impose sanctions on China and its officials.