Rupee ended higher, Pound up vs. Dollar

Friday,   19-Apr-2024   04:11 PM (IST)

The Indian rupee recouped opening losses and ended the session higher at 83.47/48 levels compared to its opening at 83.5550/5650 levels after touching the high of 83.4625/4725 levels despite weakness across regional peers, helped by possible intervention from RBI and dollar sales from foreign banks.  Rupee traded in the range of 83.4625-83.5750 level today. Rupee had dropped to a lifetime low of 83.5750 today but the RBI likely intervened in the onshore over-the-counter market and in non-deliverable forwards to curb further fall.  Most Asian currencies dropped, with the Korean won leading the losses, on reports that Israel attacked Iran in the latest tit-for-tat exchange between the two adversaries. Indian government bond yields were up as oil prices rose tracking tensions in the Middle East. India's benchmark indexes bucked the global weakness to end higher on Friday, boosted by HDFC Bank, although the gains were not enough to prevent their first weekly loss in five on worries over the Middle East conflict and U.S. rates. The S&P BSE Sensex ended 599.34 points, or 0.83% higher at 73,088.33 levels. The Nifty50 hit closed at 22,147, up 151.15 points or 0.69%. In the forward segment 1mth, 3mth and 6mth annualized premia ended the day at 1.12%, 1.24% and 1.38% respectively.

The pound was little changed on Friday after falling to a five-month low against the dollar in Asian trading hours as investors responded to reports of an Israeli attack on Iran. People familiar with the matter told Reuters that Israel attacked Iran, days after Iran launched an unprecedented assault on Israel in response to a suspected Israeli strike on its consulate in Syria. Safe-haven currencies such as the Swiss franc, yen and dollar initially spiked on the news, helping push down the pound and the euro. Yet the market reaction later unwound somewhat after Iran played the incident down and said it did not plan a new response. The pound is down marginally for the week but off by 1.5% for the month so far after a jump in the dollar caused by strong U.S. economic data. The dollar index was 0.1% higher on Friday. The euro was little changed against the pound at 85.58 pence, having traded around that level since February. Aside from tensions in the Middle East, UK investors were parsing data which showed retail sales stagnated in March despite inflation easing, a reminder of the troubled state of the economy. Traders broadly expect the Bank of England to lower interest rates once or twice this year, likely starting in August or September, according to pricing in derivatives markets. Markets were expecting four or more rate cuts at the start of the year but the strength of U.S. growth and price pressures, and a slight tick-up in UK growth, have raised doubts about whether inflation has been conquered.