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Rupee ended higher, Pound rose vs. Dollar

Friday,   16-Oct-2020   03:10 PM (IST)

The Indian rupee ended the session higher at 73.34/35 levels compared to its opening at 73.4225/4325 levels after touching the high of 73.2725/2825 levels as further gains in local shares outweighed the impact of weak Asian cues. Rupee traded in the range of 73.2725-73.43 levels today. Asian currencies were mostly lower. Indian sovereign bond yields remained higher in the afternoon session, as the government hiked its market borrowing and traders awaited the results of the weekly debt auction. Equity markets were trading half a per cent higher, lifted by financials and metal stocks, in Friday's volatile session. At 2:33 pm, the S&P BSE Sensex was trading at 40,040, up 311 point, while the broader Nifty50 was at 11,768 up 88 point. Other Asian equities struggled amid worries over whether the world economic recovery momentum could be sustained amid uncertainty over the U.S. fiscal stimulus and increasing coronavirus infections in Europe. In the forward segment 1mth, 3mth and 6mth annualized premia ended the day at 3.27%, 3.54% and 3.92% respectively.

Sterling rose slightly on Friday but was still on track to end the week on a loss, as markets waited for Britain to say whether it would continue with Brexit negotiations after the European Union leaders’ summit left the UK disappointed. Britain left the European Union in January. Since then, both sides have been locked in negotiations to try and reach a trade deal before the status-quo transition period ends on Dec. 31. British Prime Minister Boris Johnson will set out his approach to Brexit later on Friday. He had previously set Oct. 15 as a deadline after which the UK would quit negotiations if a deal had not been reached. Currently, the pound was up versus the dollar, at $1.2949, but set to end the week down 0.9%. British Foreign Secretary Dominic Raab said the EU was demanding that the UK make all of the compromises. He also said that both sides were “close” to a deal. But Germany’s Europe minister said that no progress has been made on the main topics. The EU’s chief negotiator said that the bloc’s national leaders want a deal, but not at any cost. The main areas of contention are: fair competition, dispute resolution and fisheries, with France taking a particularly hardline on the latter. The possibility of negative rates is also weighing on sterling and analysts say this as linked to the Brexit situation because the Bank of England would be more likely to slash rates if the UK’s economy deteriorates after a no-deal outcome. London will enter a new level of COVID-19 lockdown from midnight on Friday, meaning different households cannot mix indoors.