Rupee ended lower, Dollar up vs. major currencies

Wednesday,   18-May-2022   04:02 PM (IST)

The Indian rupee erased early advances and ended the session a tad lower at 77.58/59 levels compared to its opening at 77.55/56 levels after touching the low of 77.61/62 levels amid persistent concerns of more aggressive policy measures from global central banks to cool inflation, even as the pace of economic growth around the world is threatened from the fallout of the Ukraine conflict. Rupee traded in the range of 77.4725-77.61 levels today. Rupee had climbed to as high as 77.4725/4825 levels earlier in the day, as local shares rose as much as 0.9%, tracking the rise of Asian equities. This had followed overnight advances on Wall Street on robust U.S. economic data. The rupee traded mostly in line with steady to declining moves of regional peers except the South Korean won, which was the best performer today among Asia’s key currencies. Asian currencies were broadly mixed. Indian federal government bond yields ended largely unchanged ahead of the release of minutes of the Monetary Policy Committee’s unscheduled meeting held earlier this month. After trading higher for better part of the day, equity markets turned volatile and ended lower. The benchmark S&P BSE Sensex ended at 54,209, down 110 points or 0.2 per cent. The NSE Nifty50 closed at 16,240, down 19 points or 0.12 per cent. In the forward segment 1mth, 3mth and 6mth annualized premia ended the day at 3.43%, 3.40% and 3.47% respectively.

The U.S. dollar bounced back on Wednesday, a day after its biggest daily loss in more than two months, as U.S. Federal Reserve chief Jerome Powell struck a more hawkish tone as the central bank battles to rein in surging inflation. Powell pledged that the U.S. central bank would ratchet up interest rates as high as needed, including taking rates above neutral, to kill a surge in inflation that he said threatened the foundation of the economy. The neutral rate is the level at which economic activity is neither simulated nor constrained. The euro slipped 0.3% to $1.0516, reversing an earlier rise to a one-week high, a day after European Central Bank policymaker Klaas Knot said a 50 basis point rate increase in July was possible if inflation broadens. Sterling fell 0.7% to $1.2406 as data showing British inflation surged 9% last month to its highest annual rate since 1982 piled pressure on policymakers to help households facing a worsening cost-of-living crisis. The Australian dollar fell 0.3% to $0.70075 as Australian wage growth ticked up by only a fraction last quarter, leading investors to scale back bets on larger increases in interest rates. Figures from the Australian Bureau of Statistics on Wednesday showed its wage price index (WPI) rose 0.7% in the March quarter, missing forecasts for a 0.8% increase. The yen rose 0.1% to 129.14 per dollar, holding steady just above the two-decade low hit last week.