Rupee ended higher, Dollar edges up vs. major currencies

Friday,   12-Oct-2018   05:29 PM (IST)

The Indian rupee ended the session higher at 73.56/57 levels compared to its opening at 73.83/84 levels after touching the high of 73.53/54 levels on the back of gains tracking a weak greenback following softer-than-expected U.S. inflation data. Rupee touched the low of 73.8550/8650 levels in afternoon deals today on dollar buying by foreign banks and importers. Other Asian currencies also ended higher against the greenback. Indian shares jumped over 2 percent today; the most since late May 2016, with a stronger rupee and an overnight fall in crude prices bringing some relief after the previous session’s sharp sell-off. The benchmark BSE Sensex rose 2.15 percent to 34,733.58. The broader NSE Nifty climbed 2.32 percent to 10,472.50. Indian government bonds ended steady today, as weekly auction added to fresh supply and as market awaits retail inflation data due after market hours today.  In the forward segment 1mth, 3mth and 6mth annualized premia ended the day at 4.65%, 4.47% and 4.35% respectively. The government will release Consumer Price Index-based (CPI) inflation and Index of Industrial Production data today. India's foreign exchange reserves fell to $399.61 billion as of Oct 5, compared with $400.53 billion a week earlier, the Reserve Bank of India said.

The dollar edged up on Friday, reflecting investor confidence in the U.S. economy, despite criticism by President Donald Trump of the Federal Reserve and a sell-off in U.S. equities. A recent decline in stocks has yet to spread into foreign exchange markets, with emerging-market currencies still appreciating and the safe-haven Japanese yen and Swiss franc not budging significantly. The dollar has risen 2.5 percent since July on expectations interest rates will soon rise further and on safe-haven flows from the U.S.-China trade war. But a drop in U.S. Treasury bond yields and weaker-than-forecast rise in U.S. consumer prices saw the dollar shed half a percent on Thursday as traders cut their bets on Federal Reserve rate hikes. Hedge funds have staked out their longest dollar positions since the end of 2016 and markets are focussed on any change in economic data that could alter the Fed’s thinking. The dollar index, traded 0.1 percent at 95.143 on Friday, just below its monthly high of 96.15 on Tuesday. The euro edged down on Friday after reaching a weekly high at 1.1611 after ECB President Mario Draghi toned down his outlook for a rise in underlying inflation from “relatively vigorous” to “gradual”. ECB minutes on Thursday suggested the central bank was on track to normalise its ultra-loose monetary policy this year despite concern about slowing growth in Europe.