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Rupee ends sharply higher, Sterling rises

Monday,   03-Oct-2022   04:25 PM (IST)

The Indian rupee ended today’s session sharply lower at 81.8725/8825 levels compared to opening levels of 81.62 amid frail risk sentiment and as oil importers ramped up dollar demand expecting a jump in crude prices. The OPEC+ meeting on Wednesday regarding a decision to cut down production is leading to a lot of nervousness in the market and as a result rupee tumbled towards record lows of 81.94 today. There was reported selling by the Reserve Bank of India around 81.85-81.90 levels to stem rupee’s losses. Rupee traded in the range of 81.63 – 81.94 levels. Stocks fell heavily as oil jumped 4% after the reports of OPEC+ upcoming meeting. BSE Sensex ended at 56,788.81 (-638.11) down 1.11% while Nifty ended at 16,887.35 (-207.00) down 1.21%. Indian government bond yields ended up for a fourth straight session, with the 10-year benchmark bond yield hitting its highest level in over three months ended at 7.4683%, as debt supply concerns became the dominant trigger for sell-off. In the forward segment 1mth, 3mth and 6mth annualized premia ended the day at 3.53%, 3.15% and 2.90% respectively.

Sterling rose in today’s trading session after Britain reversed a plan to cut the highest rate of income tax. The pound touched a one-week high of $1.128 after media reports of the u-turn, its highest level since September 22, the day before British finance minister Kwasi Kwarteng sent markets tumbling with a new "growth plan" to cut taxes and regulation, funded by vast government borrowing. Sterling pared gains and was last up 0.3% at $1.1199. Meanwhile, the Japanese yen fell to 145.40 per dollar, weakening past 145 for the first time since September 22 when authorities intervened to prop up the currency. The dollar was last up 0.22% at 145.06 yen, with Asian trading thinned by holidays in China, South Korea and some Australian states. Elsewhere, EUR/USD fell 0.1% to 0.9796, after an escalation of the region’s energy crisis, with Russian energy Gazprom freezing its gas flows to Italy over the weekend. Euro was also down on expectations of another jumbo ECB rate hike this month following a red-hot inflation read-out, heightening worries that the economy will be tipped into a recession.