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Rupee ended up, Pound lower vs. Dollar

Monday,   11-Jan-2021   04:02 PM (IST)

The Indian rupee ended the session higher at 73.38/39 levels compared to its opening at 73.47/48 levels after touching the high of 73.3750/3850 levels on the back of dollar sales by foreign banks, likely for their clients. After opening lower, rupee dropped to touch the low of 73.5050/5150 levels today amid a further rise in U.S. Treasury yields and the dollar index’s rise to its highest level in nearly three weeks. Rupee traded in the range of 73.3750-73.5050 levels. Indian federal government bond yields ended higher, after the central bank’s plan to restore normal liquidity conditions hurt investor sentiment. Indian equities stayed firm at record high levels during Monday's trading session a as strong start to Q3 earnings, decision to roll out Covid-19 vaccine in the country as early as January 16, and hopes of a greater stimulus package in the US pushed the benchmark S&P BSE Sensex above the 49,000-mark for the first time. Sensex hit a record peak of 49,304 in the intra-day deals today before settling 486.8 points, or 1 per cent, higher at 49,269.32 levels. On the NSE, the Nifty50 ended at record closing peak of 14,484.75 levels, adding 137.5 points or 0.96 per cent today. In the forward segment 1mth, 3mth and 6mth annualized premia ended the day at 3.83%, 4.35% and 4.55% respectively.

The pound was among the risk assets hurt by the recovering dollar on Monday, falling below $1.35 in early trading, as Britain’s chief medical adviser warned that the next few weeks of the pandemic will be the worst yet. Widening U.S. Treasury yields and the expectation of more fiscal stimulus lifted the dollar against its rivals. Britain will open seven large-scale vaccination centres on Monday as part of the government’s plan to deliver to COVID-19 shots to all vulnerable people by mid-February. But the next few weeks of the pandemic will be the worst so far in terms of people hospitalised, the government’s chief medical advisor, Chris Whitty, said.  As market participants weigh up the economic impact of the virus against progress on the vaccine front, the possibility that the UK’s central bank will introduce negative interest rates is being priced in for as early as May 2021. Bank of England policymaker Silvana Tenreyro will give a speech about negative rates at 1400 GMT. Weekly CFTC futures data for the week to Jan. 5 showed that speculators kept a small net bullish position on the pound for the fifth week running. Elsewhere, British minister Rishi Sunak expressed concern that higher interest rates might one day raise the cost of servicing government debt, in comments published on Sunday. Interest rates in Britain currently stand at a record low 0.1%.