Rupee ended flat, Euro lower vs. Dollar

Tuesday,   23-Apr-2019   05:30 PM (IST)

The Indian rupee ended the session flat at 69.62/63 levels compared to its opening at 69.62/63 levels. Rupee touched the low of 69.84/85 levels today as few foreign banks bought dollar ahead of the forex swap auction while some dollar bids related to the fixing of reference rate also weighed. However, rupee trimmed the losses as the central bank’s forex swap auction saw better than expected demand. Some exporters sold dollars after the auction result as the demand at the auction was good against what the market had expected earlier. Rupee touched the high of 69.53/54 levels early today on the back of dollar sales by corporates. However, uptick in crude oil prices limited larger appreciation. Other Asian currencies ended little changed to lower against the greenback. The RBI received bids worth $18.65 billion at the swap auction today, against the notified amount for $5 billion for a period of three years. The cutoff on its second dollar-rupee buy/sell swap auction was at 8.38 rupees. The bid/cover ratio jumped to over 3.73 times from over three times in its previous auction in March, where the cutoff was 7.76 rupees. At the previous auction conducted last month, the central bank had received bids for more than three times the auctioned amount. Meanwhile, traders eyed conclusion of Essel Propack Ltd.’s stake sale to U.S.-based Blackstone Group for $310 million to $462 million. The deal will also trigger the mandatory open offer. Indian shares ended lower for a third straight session today, erasing gains in morning trade, hurt by declining financial shares and automobile stocks. The broader Nifty closed 0.16 percent lower at 11,575.95, while the benchmark Sensex ended down 0.21 percent at 38,564.88. Indian government bonds ended little changed as likely short covering from some traders offset early losses, even as continued surge in crude oil prices continued to weigh on sentiment. In the forward segment 1mth, 3mth and 6mth annualized premia ended the day at 5.99%, 4.97% and 4.68% respectively.

EUR/USD is on the back foot, trading around 1.1250, slightly below the highs. Traders are returning from the long Easter weekend and spreads between US and German yields hit a 4-month high, weighing on the euro. Sterling was stuck near $1.30 on Tuesday as Britain’s parliament returned from its Easter break and the ruling Conservative party tried to move talks forward with the opposition Labour party over a Brexit agreement. Volatility in sterling has fallen sharply in recent weeks after the European Union and London agreed to delay Britain’s departure date by up to six months, removing any immediate risks of a no-deal Brexit that would have hit the pound hard. But the British currency has struggled to make much headway since, as traders doubt whether the talks will end in an agreement that can win the approval of lawmakers. Data showing stronger than expected retail sales in March and a slight slowdown in inflation failed to move the pound much last week, as Brexit continues to dominate trading.