Rupee ended higher, Pound falls vs. Dollar

Friday,   18-Jun-2021   04:16 PM (IST)

The Indian rupee recouped the losses and ended the session higher at 73.86/87 levels compared to its opening at 74.0975/1075 levels after touching the high of 73.82/83 levels amid exporters’ dollar sales and aggressive greenback sales by foreign banks. In early deals rupee dropped to touch the low of 74.2750/2850 levels amid worries that a hawkish Federal Reserve outlook could spur portfolio outflows. Rupee traded in the range of 73.82-74.2750 levels today. Indian federal government bond yields were largely unchanged, as traders awaited the result of a weekly debt sale. Benchmark equity indices slumped over 1 per cent in Friday's intra-day session but made a sharp V-shaped recovery. The S&P BSE Sensex closed 21 points, or 0.04 per cent, higher at 52,344 levels. The broader Nifty50 index ended at 15,683 levels, down 8 points or 0.05 per cent.  In the forward segment 1mth, 3mth and 6mth annualized premia ended the day at 3.93%, 4.03% and 4.24% respectively.

Sterling extended its fall against the U.S. dollar on Friday, dropping below $1.39, hurt by the U.S. Federal Reserve’s hawkish surprise while data also showed an unexpected fall in Britain’s retail sales. The pound dropped against a strengthening dollar on Thursday after the Fed surprised markets by signalling it would raise interest rates and end emergency bond-buying sooner than expected. On Friday, it fell further against both dollar and euro. Currently it was down on the day $1.3899, having touched as low as $1.3853 - its weakest since May 4. It was on track for its worst week since September 2020. Versus the euro, it was down around 0.4% at 85.87 pence per euro, on track for a small weekly fall. British retail sales fell 1.4% between April and May as a lifting of lockdown restrictions encouraged spending in restaurants rather than shops. The data did not have clear impact on the pound. For cable, market participants are weighing up the Bank of England and the Fed’s relative pace of possible monetary policy tightening. The Bank of England next meets on June 24. Elsewhere, investors are watching a dispute between Britain and European Union over post-Brexit trade in the British province of Northern Ireland, which has a land border with EU member Ireland.