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Rupee ended lower, Dollar steady vs. major currencies

Monday,   27-Jul-2020   03:02 PM (IST)

The Indian rupee ended the session lower at 74.8325/8425 levels compared to its opening at 74.7050/7150 levels after touching the low of 74.90/91 levels as suspected central bank intervention in the spot market offset the impact of a weak dollar index. Rupee traded in the range of 74.6850-74.90 levels today.  Indian government bond yields rose, with the benchmark yield ending at a four-week high, as traders booked profits and on fading hopes of any immediate step by the central bank to support bond markets. The Indian equity markets slumped on Monday, dragged down by financials, but were off the day's bottom. At 2:14 pm, the S&P BSE Sensex was trading at 38,062 down 69 point, while the broader Nifty50 was at 11,156 down 38 point. In the forward segment 1mth, 3mth and 6mth annualized premia ended the day at 3.42%, 3.60% and 3.67% respectively.

The dollar steadied on Monday after reaching its lowest since September 2018 overnight, weakened by deteriorating U.S.-China relations and domestic economic concerns as U.S. COVID-19 infections showed no sign of slowing. U.S. Secretary of State Mike Pompeo said Washington and its allies must use “more creative and assertive ways” to make the Chinese Communist Party change its ways. With domestic economic concerns trumping its role as a safe-haven currency, the dollar index fell overnight to before steadying in early London trading. As COVID-19 infections show no signs of slowing in the U.S., investors are doubtful of a quick economic recovery. Nearly a quarter of the global total coronavirus deaths have been in the United States, where unemployment claims unexpectedly rose last week. Some of the earlier steps to mitigate the financial impact, such as enhanced jobless benefits, are due to expire this month and Congress has yet to agree on fresh support. The Federal Reserve meets on Tuesday and Wednesday. It could confirm recent hints about the benefits of an average inflation target, which would allow rates to stay lower for longer. Safe-haven currencies were up against the dollar. The Japanese yen traded at a four-month high versus the dollar, at 105.575. The Swiss franc was up around 0.2% at 0.91855, having reaching a five-year high of 0.9167 overnight. The euro continued its ascent after European Union leaders agreed a 750 billion-euro fiscal stimulus plan last week. But European Central Bank board member Fabio Panetta warned that the danger to the euro zone economy is not over yet.