Rupee ended lower, Pound slips lower vs. dollar
Monday,
22-Oct-2018
05:25 PM (IST)
The Indian rupee erased all initial gains and ended the session lower at 73.5550/5650 levels compared to its opening at 73.30/31 levels after touching the low of 73.56/57 levels dragged by an uptick in crude oil prices ahead of the U.S. sanctions on Iran and a stronger greenback due to ongoing uncertainty in the Euro zone. Rupee touched the high of 73.1975/2075 levels in morning deals today as foreign banks stepped up greenback sales, likely on behalf of their exporter clients. Indian shares fell for the third consecutive session today weighed down by index heavyweight Reliance Industries Ltd as macro concerns, including higher crude prices and liquidity crunch, hurt the trading sentiment. While the benchmark BSE Sensex closed down 0.53 percent at 34,134.38, the broader NSE Nifty ended 0.57 percent lower at 10,245.25. Indian government bonds ended little changed, as minutes of the latest monetary policy meeting were at par with expectations. In the forward segment 1mth, 3mth and 6mth annualized premia ended the day at 4.56%, 4.40% and 4.33% respectively. The government and nonbanking finance companies (NBFC) today put the pressure on the Reserve Bank of India and asked it to dilute the prompt corrective action (PCA) framework under which loss-making banks have been stopped from lending, said people familiar with the matter. Finance ministry and RBI officials are likely to meet soon to examine the PCA rule, sources privy to the matter told media. Housing finance companies (HFC), NBFCs and debt funds said that the current debt squeeze is due to PCA but the bankers denied this argument and blamed lack of capital for lower loan growth. Under the current rule, banks under PCA cannot lend below A+ rated companies. The rule also stops them from lending big ticket loans to companies.
Sterling slipped on Monday, as the prickly Irish border issue and disagreements within the UK ruling party over Brexit overshadowed signs that Britain and the European Union had settled most of their differences over a divorce deal. British Prime Minister Theresa May is expected to tell parliament later that 95 percent of the country’s divorce deal has been settled. But she will maintain opposition to the European Union’s proposal for the land border with Northern Ireland. That issue scuppered efforts to reach a Brexit deal at last week’s EU summit, and a proposal to extend a status-quo transition period beyond the current proposed date of December 2021 has angered the eurosceptics in her party. Against the euro, the pound fell a quarter percent to 88.300 pence, as the single currency was supported by Moody’s decision to hold off cutting Italy’s credit rating outlook to negative, a move that would have left the country at greater risk of tipping into “junk” category. Ireland too weighed in again on Brexit, with its foreign minister telling the Irish Times that an extended transition period could not be an alternative to a “backdrop” agreement. Brexit optimism, alongside a paring of dollar long positions, partly drove a fall in short sterling bets to a net 50,353 contracts in the latest week, versus more than 60,000 the week before, calculations by Reuters and the Commodity Futures Trading Commission showed.
|