Rupee ended lower, Pound edges higher vs. Dollar

Thursday,   04-Aug-2022   04:01 PM (IST)

The Indian rupee ended the session lower at 79.4650/4750 levels compared to its opening at 79.23/24 levels after touching the low of 79.8075/8175 levels as disappointing macroeconomic data and US-China tension weighed on investor sentiment. U.S. Fed officials continue to send hawkish signals to the market over last couple of days. Importer covering and traders trimming short dollar positions are compounding the rupee's slide. Rupee is underperforming among Asian currencies amid a record high trade deficit number and safe-haven demand for the dollar as traders weigh risks associated with the US-China tensions. Market also remain cautious ahead of the Reserve Bank of India (RBI) monetary policy outcome tomorrow. Rupee traded in the range of 79.23-79.8075 levels today. Indian government bond yields eased tracking a fall in oil prices, with traders awaiting RBI's monetary policy decision tomorrow. Equity markets ended lower as investors booked profit after six consecutive sessions of rally. The S&P BSE settled at 58,299, down 52 points or 0.09%. The NSE Nifty50 closed at 17,382, down 6 points or 0.04%.In the forward segment 1mth, 3mth and 6mth annualized premia ended the day at 3.02%, 3.12% and 2.99% respectively.

Sterling edged up on Thursday and traded near its highest level against the euro since April ahead of a Bank of England policy meeting, with the central bank expected to hike interest rates by the most since 1995. The central bank is largely expected to raise rates by 50 basis points (bps) to 1.75%, the highest since late 2008, and its sixth increase since December as it attempts to cool inflation from a four-decade high. Money markets are currently pricing in a greater than 90% chance of a 50 bps hike when the Bank of England (BoE) announces its decision at 1100 GMT, according to Refinitiv data. A Reuters poll published on Monday showed over 70% of the 65 respondents to the July 27-Aug. 1 survey expected a half-point increase from the BoE’s Monetary Policy Committee. A 25 bps hike would suggest a gloomy economic outlook and hit the pound hard, traders said. Sterling edged up in early London trading before flattening against the single currency at 83.68 pence at 0827 GMT, remaining near highs last seen in April. Against the dollar, the pound rose to $1.2175, not too far from a month high touched on Monday. Sterling has weakened more than 10% against the dollar this year as rampant inflation, a weakening economy and war in Europe have encouraged investors to sell the risk-sensitive currency.