Rupee ended lower, Pound off highs vs. Dollar

Wednesday,   27-May-2020   02:55 PM (IST)

The Indian rupee ended the session lower at 75.7150/7250 levels compared to its opening at 75.67/68 levels after touching the low of 75.7350/7450 levels tracking a weakness in the Chinese Yuan amid increasing U.S.-China tensions over Hong Kong. Rupee traded in the range of 75.5750-75.7350 levels. However, foreign fund inflows checked the losses in rupee. Potential flows related to Bharti Telecom, the parent company of telecom major Bharti Airtel, have kept the rupee supported throughout today’s session, traders said. Bharti Telecom has announced a $1 billion stake sale to help alleviate its debt. Asian currencies were mixed. Indian federal government bond yields ended marginally higher in thin-volume session, as traders awaited the central bank’s bond purchase plan. Benchmark indices shot up nearly 3 per cent today, propelled by banks and financials, ahead of the upcoming derivative contract expiry. At 2:08 pm, the S&P BSE Sensex was trading at 31,626, up 1017 point, while the broader Nifty50 was at 9,324 up 295 point. In the forward segment 1mth, 3mth and 6mth annualized premia ended the day at 3.72%, 3.51% and 3.65% respectively.

Sterling retreated below $1.2310 on Wednesday as the dollar regained strength and investors’ focus shifted back to the possibility of negative interest rates in Britain. Bank of England Chief Economist Andy Haldane on Tuesday played down the prospect of imminently taking rates into negative territory, saying that “reviewing and doing are different things”. But analysts believe that once the talk of negative rates has taken hold in the markets, it would be hard to shift the focus away from it. The pound was last down 0.3% at $1.2298 and shed 0.2% versus the euro to 89.22 pence. Apart from negative rates, a high rate of COVID-19 related deaths and an astonishing amount of government debt were also weighing on sterling. Britain is likely to run a budget deficit equal to 5% of gross domestic product in 2024, when Britain’s next national election is due, the Financial Times reported. EUR/USD is trading above 1.0950 but off the highs as the safe-haven dollar is edging up amid tensions in Hong Kong. ECB President Lagarde is set to speak shortly amid efforts to present a recovery plan.