Rupee ended lower, Dollar higher vs. major currencies

Monday,   14-Jun-2021   04:13 PM (IST)

The Indian rupee ended the session lower at 73.27/28 levels compared to its opening at 73.20/21 levels after touching the low of 73.2750/2850 levels tracking a broad-based decline in regional currencies and an uptick in crude oil prices. Rupee traded in the range of 73.0950-73.2750 levels today. The rupee came under pressure following a rebound on the dollar index to above 90.50, amid position adjustments ahead of the U.S. Federal Reserve meeting that gets underway tomorrow. Indian federal government bond yields ended little changed at the start of the week as investors stayed on the sidelines ahead of an expected rise in the inflation rate for May. Asian equities were most range-bound. Trading volumes were less than usual with markets in Australia, China, and Hong Kong remaining closed. The benchmark indices recouped losses and ended higher amid gains in Reliance Industries, Infosys and Bajaj Finance and a firm global market mood. The frontline Sensex index ended 77 points, or 0.15 per cent, higher at 52,551.5 levels. The Nifty50 index, meanwhile, settled at 15,812 levels, up 13 points or 0.08 per cent. In the forward segment 1mth, 3mth and 6mth annualized premia ended the day at 4.12%, 4.22% and 4.37% respectively.

The dollar consolidated gains on Monday after posting its biggest weekly rise in six weeks as traders cut their bearish bets before a much-anticipated Federal Reserve meeting that might signal a change in the outlook for U.S. monetary policy. The U.S. central bank begins a scheduled two-day policy meeting on Tuesday. Recent data pointing to a surge in inflation has raised concerns that price pressures following the post-COVID economic reopening could force policymakers into an earlier tapering of currency-depreciating stimulus. While consensus expectations are the Fed will remain on hold until 2023, some believe the failure of the dollar to weaken in recent days despite inflation-adjusted U.S. bond yields softening further signals a broader caution among investors. Against a basket of its rivals, the greenback steadied at 90.5 in early London trading after rising as much as 0.4% last week, its biggest weekly rise since early May. The dollar’s gains were aided by some unwinding of short dollar bets. In the week ended June 8, speculators had ratcheted up net short positions to the highest in nearly three months at $18.35 billion. Caution ahead of the Fed meeting also pushed a Deutsche Bank gauge of implied currency-market volatility to the lowest since February of last year, dropping around 10% since the start of the month. The British pound was the biggest loser among developed currencies on news that Britain was set to delay the end of social distancing measures as the government tries to slow a rapid rise in COVID-19 infections. Against the dollar and the euro, the pound weakened as much as 0.2% in London trading.