Rupee ended almost flat, Dollar remains supported vs. major currencies

Thursday,   22-Feb-2018   05:27 PM (IST)

The Indian rupee ended the session almost flat at 65.04/05 levels compared to its opening at 65.05/06 levels. Rupee touched the low of 65.1075/1175 levels today tracking broad greenback strength after the Federal Reserve’s meeting minutes boosted faster rate hike bets this year amid hopes of stronger economic growth in the world’s biggest economy. However, state-run lenders’ dollar sales, likely for the central bank, limited further losses in the local unit. Rupee traded in the range of 64.9525-65.1075 levels today. Indian shares ended lower today in a volatile session ahead of the expiry of futures and options contract, as the mood was dampened after the minutes of the central bank’s latest policy meeting showed inflation concerns persisted. The Sensex closed down 0.07 percent at 33,819.50. The Nifty ended 0.14 percent lower at 10,382.70, with Bharat Petroleum Corp Ltd being top percentage loser. Indian sovereign bonds fell to a fresh record low, as minutes of the latest Monetary Policy Committee meeting showed members were concerned about inflation gaining pace, likely prompting interest rate increases going ahead. In the forward segment 1mth, 3mth and 6mth annualized premia ended the day at 4.15%, 4.43% and 4.11% respectively.

The U.S. dollar pulled slightly back but remained near one-and-a-half week highs against other major currencies on Thursday, after the minutes of the Federal Reserve's latest policy meeting boosted expectations for upcoming U.S. rate hikes. The minutes of the Fed's January policy meeting released on Wednesday showed that central bank officials see increased economic growth and rising inflation as justification to continue to raise interest rates gradually. The news lent broad support to the greenback despite sustained worries over the U.S. deficit, which is projected to climb near $1 trillion in 2019 following the recent announcement of infrastructure spending and large corporate tax cuts. The dollar had been pressured lower recently by expectations for a faster pace of monetary tightening outside the U.S., which would lessen the divergence between the Fed and other central banks. Sterling came under pressure after official data showed Britain’s annual economic growth was downwardly revised for the fourth quarter. In the euro zone, data on Thursday showed that German business confidence deteriorated in February.