Rupee ended lower, Pound higher vs. Dollar

Monday,   18-Feb-2019   05:23 PM (IST)

The Indian rupee ended the session tad lower at 71.34/35 levels compared to its opening at 71.31/32 levels. Rupee touched the low of 71.52/53 levels today as higher oil prices that risked further widening of the current account deficit and weak local equities weighed on sentiment. However, rupee trimmed the losses by the end of the day. Rupee traded in the range of 71.31-71.52 levels today. Most Asian currencies ended higher against the dollar on trade talk optimism. The Sensex and Nifty closed lower today dragged by losses across most sectors, as investors awaited cues after lackluster growth in December quarter corporate earnings. The Sensex closed down 0.87 percent at 35,498.44. The Nifty ended 0.78 percent lower at 10,640.95. Indian government bonds fell today, as higher crude oil prices and an increased borrowing plan hurt demand. In the forward segment 1mth, 3mth and 6mth annualized premia ended the day at 4.75%, 4.36% and 4.16% respectively.

Sterling drifted higher on Monday after registering three consecutive weeks of losses as investors waited for the outcome of Brexit talks between Britain and the European Union. British Prime Minister Theresa May plans to speak to every EU leader and the European Commission chief to seek changes to her EU withdrawal agreement, after another defeat from her own lawmakers last week. While May has told EU leaders she could pass her deal with concessions primarily around the Irish backstop issue, the symbolic defeat in Parliament has weakened her negotiating hand and increased the risk of a “no-deal” Brexit in 40 days. It rallied more than half a percent on Friday helped by reports of some hedge fund buying, a conciliatory tone on Brexit from the Irish foreign minister and strong British retail sales published earlier in the day. Broader currency markets were quiet with U.S. markets shut for a holiday. Derivative markets were cautious with two-month pound risk reversals, a gauge of calls to puts on the British currency, hovering near three-month lows, a sign that investors are more cautious about the pound’s outlook in the near term.