Rupee ended tad lower, Dollar falls vs. major currencies

Friday,   31-Jul-2020   02:44 PM (IST)

The Indian rupee ended the session tad lower at 74.81/82 levels compared to its opening at 74.7450/7550 levels after touching the low of 74.9025/9125 levels on slight dollar buying in the market. Rupee touched the high of 74.68/69 levels today tracking a broad decline in the greenback amid uncertainty over the extent of the U.S. economic recovery. Rupee traded in the range of 74.68-74.9025 levels. Indian government bond yields ended lower for the sixth consecutive month as traders continued to anticipate steps from the central bank, even as the fall reversed somewhat towards the later part of the session, ahead of the monetary policy decision next week. Equity markets were trading lower in Friday's volatile session, weighed down by heavyweights Reliance Industries (RIL) and the HDFC twins. At 2:40 pm, the S&P BSE Sensex was trading at 37,691 down 45 point, while the broader Nifty50 was at 11,091 down 12 point. In the forward segment 1mth, 3mth and 6mth annualized premia ended the day at 3.49%, 3.57% and 3.69% respectively.

The dollar extended its dramatic fall on Friday, putting it on course for its biggest monthly drop in a decade as investors fretted that a rebound in the U.S. economy would be derailed by the struggle to stem the coronavirus epidemic. Weakness in the U.S. currency propelled the euro higher, with the single currency touching $1.19, its strongest since May 2018, and enjoying its best month since September 2010. Confidence in the U.S. currency was undermined further after U.S. President Donald Trump on Thursday raised the possibility of delaying the nation’s November presidential election. That came on the same day advance gross domestic product (GDP) data showed contraction of an annualised 32.9% in the second quarter, the quickest pace since the Great Depression. The dollar index slid to as low as 92.546, levels last seen in May 2018. It has fallen 4.9% in July, with most of the drop coming in the last 10 days as new cases of coronavirus surged across several U.S. states and some recent data pointed to an economic recovery losing steam. The euro surged to as high as $1.1908 before settling at $1.1897, up 0.5% on the day. The euro traded below $1.10 as recently as May, but after European Union leaders agreed this month to a 750 billion euro economic recovery fund - while also taking on debt jointly in a major boost to regional cooperation - many investors have warmed to the single currency again. On a trade-weighted basis, the euro is at its highest since 2014. The dollar’s drop this month has given currencies that were hit hard in March and April, when investors rushed for the safety of the greenback as panic over the coronavirus gripped markets, space to rebound.