Rupee ended flat, Pound falls vs. Dollar

Thursday,   30-Jul-2020   02:44 PM (IST)

The Indian rupee ended the session flat at 74.84/85 levels compared to its opening at 74.84/85 levels amid focus on U.S. gross domestic product data, after the Federal Reserve reiterated its dovish commentary to shore up a coronavirus-ravaged economy. Rupee touched the low of 74.88/89 levels today on month-end dollar demand by importers, but pared losses due to positive risk appetite in the region. Rupee traded in the range of 74.81-74.88. Risk appetite in the region improved after the Fed yesterday kept its benchmark rate near zero while Fed Chair Jerome Powell reiterated its commitment to "do what we can, and for as long as it takes," to help the world’s largest economy tide over a “challenging time.” Asian currencies and equities were broadly higher, but gave up gains as the Fed offered no real clues about its next moves, beyond an expected pledge to keep policy easy. Indian government bond yields ended largely unchanged, after easing in the last two sessions, with market participants awaiting the sale of a new 10-year note tomorrow for further cues. Indian equity markets pared majority of the morning gains and turned lower on Thursday ahead of the monthly Futures and Options (F&O) contracts' expiry. At 2:10 pm, the S&P BSE Sensex was trading at 37,876 down 196 point, while the broader Nifty50 was at 11,143 down 60 point. In the forward segment 1mth, 3mth and 6mth annualized premia ended the day at 3.45%, 3.59% and 3.69% respectively.

Sterling rose against a weaker euro but fell versus the dollar on Thursday after the $1.30 level reached late in the previous session did not hold, with Brexit and the economic fallout from coronavirus weighing on the currency. Global market sentiment was boosted late on Wednesday after the head of the U.S. Federal Reserve, Jerome Powell, said the bank would “do what we can, and for as long as it takes” to limit the coronavirus damage to the United States’ economy, but optimism was tempered by record-high COVID-19 infections. The dollar fell while Powell was speaking, with the pound reaching $1.30 for the first time since early March, but the dollar recouped some recent losses early on Thursday. Versus the dollar, the pound was at $1.2984 at 0809 GMT, down 0.1% since New York’s close. It was up around 0.2% versus a weaker euro, at 90.535 pence. Investors are generally bearish on the pound as the UK and European Union have made little progress on post-Brexit trade arrangements. Britain left the EU in January and its transition period ends on December 31. The EU’s banking watchdog said on Wednesday said that banks using Britain as a gateway to the EU must put in place their plans for serving EU customers before the transition period ends. The outlook for the UK is also hampered by Britain’s high COVID-19 death toll. British Health Secretary Matt Hancock said the number of coronavirus cases in the country is no longer falling, and is at best flat. He also said he was worried about a second wave of coronavirus infections in Europe and that the government would not hesitate to bring back quarantine measures if necessary to keep Britain safe.