Rupee ended tad lower, Euro higher vs. Dollar

Thursday,   21-Jan-2021   04:20 PM (IST)

The Indian rupee ended the session a tad lower at 72.99/73.00 levels compared to its opening at 72.9550/9650 levels after touching the low of 73.0175/0275 levels. After opening higher, rupee rose to 72.94/95 levels today as risk sentiment in the region firmed up on hopes that the new U.S. President’s policies would accelerate economic recovery. However, state-run banks’ dollar purchases, likely on behalf of the central bank, prevented large-scale gains in the local unit.  Indian federal government bond yields rose ahead of a weekly debt sale tomorrow. Indian shares ended lower on Thursday as some investors locked in profits after major indexes hit record highs, with the benchmark Sensex surpassing the 50,000 level for the first time. The blue-chip NSE Nifty 50 index fell 0.37% to 14,590.35, while the S&P BSE Sensex closed down 0.34% at 49,624.76 after touching a record high of 50,184.01 earlier in the session. In the forward segment 1mth, 3mth and 6mth annualized premia ended the day at 4.07%, 5.11% and 4.91% respectively.

The euro ticked higher before a meeting of the European Central Bank on Thursday, with the dollar declining versus major peers as plans for a massive U.S. stimulus package fuelled market optimism and sapped demand for safe-haven currencies. Stock markets reached record highs on Wall Street and in Asia following the inauguration of Joe Biden, amid hopes the 46th president of the United States would secure a $1.9 trillion package to prop up the COVID-19 hit economy. The dollar index slipped 0.2% to 90.240, declining for a third day after touching a nearly one-month high of 90.956 on Monday. The euro gained 0.2%, reversing a similar decline from the previous session, to trade at $1.2146 about four hours before the ECB's policy announcement at 1245 GMT. Many analysts expect the dollar to continue its downtrend trend, which saw it lose nearly 7% in 2020 amid ultra-loose U.S. monetary policy and hopes for a post-pandemic global recovery. The Bank of Japan kept monetary policy unchanged on Thursday while revising up its economic forecast for next fiscal year. Central bank left its key policy interest rate at a record-low zero percent on Thursday, as expected, and said the economy was developing largely as anticipated Bank has said it plans to raise rates early next year as the economy recovers from the coronavirus pandemic, which could making it the first among G10 central banks to raise the cost of borrowing. The Aussie dollar rose 0.2% to 77.62 U.S. cents, adding to a 0.7% rally in the previous session. Australia boasted another solid rise in employment in December, data released Thursday showed. U.S. currency slipped against the Canadian dollar, down 0.13% to C$1.2618 after the Bank of Canada opted not to cut interest rates. central bank said on Wednesday that the arrival of a COVID-19 vaccine and stronger foreign demand is brightening the economic outlook in the medium term, opting to hold its key overnight interest rate at 0.25%.