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Rupee ended lower, Pound eased vs. Dollar

Friday,   05-Aug-2022   04:02 PM (IST)

The Indian rupee ended the session lower at 79.23/24 levels compared to its opening at 79.16/17 levels after touching the low of 79.2875/2975 levels as importers covered their positions. Most Asian currencies treaded water today as investors remain cautious ahead of key U.S. payrolls data. Rupee touched the high of 78.94/95 levels, having broken above the 79 level briefly after the RBI hiked the key policy rate for the third time to tackle persistently high inflation in economy. Sliding oil prices and lower U.S. yields also aided rupee. Rupee traded in the range of 78.94-79.2875 levels today. MPC raised the repo rate to 5.40%. RBI retains policy stance at withdrawal of accommodation. The SDF rate and the MSF rate were accordingly adjusted higher by the same quantum to 5.15% and 5.65%, respectively. The MPC retained its GDP growth projection for 2022/23 at 7.2%, while its inflation forecast remained unchanged at 6.7%. Indian government bond yields reversed its declining trend after the policy decision. Indian shares rose on Friday as rate-sensitive banking stocks climbed after RBI hiked its key policy rate. The S&P BSE Sensex index ended at 58,388, up 89 points or 0.15 per cent. The Nifty50, on the other hand, closed 16 points, or 0.09 per cent, higher at 17,398 levels. In the forward segment 1mth, 3mth and 6mth annualized premia ended the day at 3.06%, 3.16% and 3.00% respectively.

The British pound eased against the U.S. dollar on Friday, a day after the Bank of England (BoE) raised interest rates by the most in 27 years in an attempt to smother surging inflation but delivered a stark warning about growth. The BoE lifted its main interest rate by 50 basis points to 1.75%, its highest since late 2008, but said the economy would slip into recession at the end of 2022 and not emerge until 2024. Analysts predict that the gloomy outlook, coupled with the BoE’s resolve to fight inflation, which the bank expects to hit 13%, is likely to keep sterling under pressure. The pound was last trading down 0.1% against the dollar at $1.21385 after dropping as low as $1.2065 after the BoE’s decision on Thursday. Against the euro, the pound eked out a 0.1% gain after a 0.64% drop on Thursday, its biggest one-day fall since June 14. Market attention was now turning to Friday’s U.S. jobs report for hints about the state of the world’s largest economy and its labour market. Economists expect an increase of 250,000 jobs for the month of July, after 372,000 were added in June.