Rupee ended weaker, Pound rose vs. Dollar

Friday,   15-Sep-2023   04:29 PM (IST)

The Indian rupee ended the session weaker at intraday low of 83.1850/1950 levels compared to its opening at 83.0350/0450 levels amid rising crude oil prices and persistent dollar demand from importers. Rupee traded in the range of 82.9950-83.1850 levels today. While the rupee was range bound through the day, it moved sharply lower in the final few minutes of the session after India reported a higher than expected merchandise trade deficit of $24.16 billion in August against an expected $21 billion. The sharp reaction to the trade deficit numbers triggered stop losses, leading to further selling pressure. Equity inflows supported the rupee through the day while oil companies' dollar buying maintained pressure on the unit. Most Asian currencies declined with the Philippine peso leading losses. The offshore Chinese Yuan was largely unchanged following stronger-than-expected economic data. Indian government bond yields were up after weaker than expected bidding for debt auction. Indian shares settled at record highs on Friday, helped by the Bajaj Auto-led surge in auto stocks, while the benchmark Sensex logged its longest daily winning streak in 16 years. On the day, the Nifty 50 was up 0.44% to 20,192.35, while the S&P BSE Sensex gained 0.47% to 67,838.63. In the forward segment 1mth, 3mth and 6mth annualized premia ended the day at 1.42%, 1.48% and 1.55% respectively.

The pound rose against the dollar on Friday as the greenback slipped and as traders looked ahead to the Bank of England's interest rate decision next week. Sterling was up 0.18% against the dollar at $1.2433. Meanwhile, the euro was little changed against the pound at 85.79 pence. The dollar index, which tracks the currency against six peers, was down 0.19% at 105.21. Sterling has been one of the best performing currencies this year, up 2.8% against the dollar since the start of January. But it has fallen since mid-July as the UK labour market has weakened and the dollar has rebounded on the back of a relatively strong U.S. economy. The euro has dropped more than 5% against the dollar since mid-July as the euro zone economy has slowed. Against the pound, it's been effectively flat over the same period. The Bank of England will set interest rates next week and pricing in derivatives markets shows traders think it highly likely that policymakers will increase borrowing costs by 25 basis points to 5.5%. On Thursday the European Central Bank raised interest rates to 4% but said it was likely finished tightening monetary policy. The U.S. Federal Reserve sets interest rates on Wednesday. Inflation in Britain stood at 6.8% in July, compared with 5.3% in the euro zone. British inflation figures for August are due on Wednesday next week, a day before the BoE sets rates. On Friday, a BoE survey showed that the UK public's predictions for inflation remained broadly stable in August at 3.6%.