Rupee ended lower, Euro lower vs. Dollar

Monday,   18-Jan-2021   04:09 PM (IST)

The Indian rupee ended the session lower at 73.2750/2850 levels compared to its opening at 73.2150/2250 levels after touching the low of 73.3050/3150 levels on the back of the dollar index reaching a near-one-month high amid risk aversion. Dollar demand from importers also weighed on the local unit. Rupee traded in the range of 73.1975-73.3050 levels today. India’s federal government bond yields fell as the central bank will buy notes at an open market operation this week. Indian shares ended at a more than one-week low on Monday, weighed down by non-bank financial companies (NBFCs) on fears over possible tighter rules for the sector, although gains in heavyweights HDFC Bank and Reliance Industries capped losses. The Sensex index ended at 48,564 levels, down 470 points or 0.96 per cent. Nifty50, meanwhile, gave up 14,300 and ended at 14,281 levels, erasing 152 points or 1 per cent. In the forward segment 1mth, 3mth and 6mth annualized premia ended the day at 4.16%, 4.84% and 4.76% respectively.

The U.S. dollar held firm at a four-week high against its rivals on Monday as an undercurrent of risk aversion swept through currency markets in the backdrop of weak U.S. economic data, knocking the Australian dollar and the euro lower. With U.S. markets shut for a holiday on Monday and Joe Biden set to be inaugurated as the next U.S. President on Wednesday, major currencies remained within well-worn ranges expecting some volatility later in the week. After a dollar selloff last year, the opening weeks of 2021 has seen a reversal of fortunes with a broad dollar basket rising nearly 2% so far this year thanks to a broad-based rise in U.S. Treasury yields, though analysts remain wary about the short-term outlook. The euro dipped to a six-week low of $1.2066. The Antipodeans were soft against the greenback with the Aussie hitting a one-week trough of $0.7679, while the kiwi at a three-week low of $0.7117. Better-than-expected Chinese economic data headed off further weakness among riskier currencies, but was not enough to shift currency traders' mood decisively. The mood soured after Friday's data showed U.S. retail sales fell for a third straight month in December, stoking worries that the recovery is running into trouble as health authorities warned that the worst of the latest COVID-19 wave might be yet to come. Europe is also facing surging cases and an Italian government that must survive crucial votes in parliament on Monday and Tuesday in order to cling to power is also making some traders nervous. The dollar index steadied after touching a one-month high and last traded at 90.857, its highest level since Dec. 21.