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Rupee ended off highs, Dollar pared losses vs. major currencies

Monday,   22-Feb-2021   04:12 PM (IST)

The Indian rupee ended the session off highs at 72.5050/5150 levels after touching the high of 72.28/29 levels on dollar buying by state run banks likely on behalf of RBI. Rupee today opened at 72.58/59 levels and moved up to 72.28/29 levels in early deals aided by corporate dollar inflows as well as reduced intervention strategy from the central bank. Dollar purchases by state-run banks, likely for the central bank, and dollar sales from a large foreign bank led to some reversal in the local currency. Rupee traded in the range of 72.28-72.5825 levels. The inflows are attributed to raising of dollar-denominated funds by state-run companies like NTPC and REC, while PFC recently raised funds via dollar bonds. The positive session for the rupee came despite a decline in most Asian currencies and tepid risk appetite. The BSE Sensex extended last week’s losses to fall to an over-two-week low and regional currencies struggled amid a further rise in Treasury yields. Sensex settled at 49,744 levels, down 1,145 points or 2.25 per cent. Nifty50 index ended at 14,676, down 306 points or 2 per cent. Indian federal government bond yields ended higher with the 10-year yield at a six-month-high, as lack of support by the Reserve Bank of India hurt investor sentiment. In the forward segment 1mth, 3mth and 6mth annualized premia ended the day at 4.63%, 5.74% and 5.46% respectively.

The U.S. dollar pared losses after hitting multi-year lows against sterling and the Australian and New Zealand currencies as vaccine progress, expectations for faster economic growth and inflation sent bond yields higher. Yields on 10-year U.S. and German government bonds hit one-year and eight-month highs respectively as traders continued to play reflation trades. The British pound was holding the $1.40 line after reaching 1.4043, its highest since April 2018, as Prime Minister Boris Johnson charts a path out of lockdowns on the back of rapid vaccinations. The Aussie rose as much as 0.5% to an almost three-year high of $0.7908 before letting the dollar come back to 0.7864. The kiwi hit $0.7338, also its best since early 2018, helped by S&P’s upgrade of New Zealand’s sovereign credit ratings by a notch, but also saw the greenback gradually pare most losses. The yen lost 0.33% at 105.78 while the euro lost 0.2% at $1.2095 ahead of a German sentiment survey and a speech at 1345 GMT by European Central Bank President Christine Lagarde. All in all, the U.S. dollar index was up 0.28% at 90.543. In the cryptocurrency market, bitcoin eased from the record high of $58,354.14 hit during the weekend, retreating to $56,039.