Rupee ended lower, Pound lower vs. Dollar

Tuesday,   22-Jun-2021   04:05 PM (IST)

The Indian rupee ended the session lower at 74.3650/3750 levels compared to its opening at 74.17/18 levels after touching the low of 74.3925/4025 levels as the dollar index resumed its climb ahead of the Federal Reserve chairman's testimony before lawmakers today. Rupee fell to a near two-month low of 74.3925/4025 levels on state-run banks' dollar bids, likely on behalf of importers. Rupee traded in the range of 74.0625-74.3925 levels today. The rising price of crude oil is another source of worry for the rupee. The near-month Brent contract was hovering near $75 per barrel after hitting an over-two-year high earlier in the session. Asian equities ended higher following a recovery on Wall Street yesterday. Regional currencies were mixed, while the benchmark 10-year U.S. yield was just under 1.50%. Indian federal government bond yields settled largely unchanged today as crude oil prices came off highs. India's BSE Sensex closed almost flat. The S&P BSE Sensex index closed at 52,589 levels, up 14 points or 0.03 per cent. The Nifty50 index ended at 15,773 levels, up 26 points or 0.17 per cent.  In the forward segment 1mth, 3mth and 6mth annualized premia ended the day at 4.15%, 3.99% and 4.11% respectively.

Sterling fell back below $1.39 on Tuesday as the dollar picked up in early trading, but the British currency was still above the two-month lows it reached on Monday after the Fed’s hawkish shift. The U.S. Federal Reserve surprised some market participants last week by signalling that it would raise interest rates and end emergency bond-buying sooner than expected - prompting the dollar to rise and riskier currencies to lose out. The pound hit a two-month low of $1.37865 early on Monday, recovered later in the session, then dipped back down again on Tuesday, down at $1.3858. Versus the euro, it was down 0.2% at 85.70 pence per euro, still trading within recent ranges. Speculators increased their net long position on the pound versus the dollar in the week to June 15, CFTC data showed. Investors are focused on the UK’s reopening plans, after the full easing of lockdown was delayed by a month due to the more infectious Delta variant of COVID-19. British Health Minister Matt Hancock suggested on Tuesday that England’s lockdown could fully end as planned on July 19 because a recent rise in cases is not resulting in deaths. Also in focus is the Bank of England meeting on Thursday. Analysts expect no changes to policy after the BoE last month said it would slightly slow the weekly pace of its bond purchases.