Rupee ended higher, Pound steady vs. Dollar

Monday,   22-Apr-2024   04:02 PM (IST)

The Indian rupee ended the session higher at 83.3625/3725 levels compared to its opening at 83.3975/4075 levels after touching the high of 83.33/34 levels aided by likely equity inflows and dollar sales from state-run banks. Both foreign and state-run banks were spotted offering dollars today, which helped lift the rupee. Rupee traded in the range of 83.33-83.4450 level today. Asian currencies were rangebound as risk aversion eased after Iran played down the impact of an Israeli drone attack and indicated it had no plans for retaliation. Indian government bond yields were down as oil prices ease. Indian shares closed higher, tracking a rebound in global markets due to easing worries over the escalation of tensions in the Middle East. The S&P BSE Sensex settled 560.29 points, or 0.77%, higher at 73,648.62 while the Nifty50 ended at 22,336.40, up 189.40 points or 0.86%. In the forward segment 1mth, 3mth and 6mth annualized premia ended the day at 1.11%, 1.21% and 1.35% respectively.

The pound held steady against the dollar and nudged up against the euro on Monday, after hitting its weakest since November last week. Investors have cut back their bets in either direction on the pound and hold a fairly neutral stance, based on weekly data from the U.S. markets regulator. Sterling was flat at $1.2340, having touched its lowest in five months last week. The performance of the pound is often more obvious against the euro, as it keeps the dollar out of the equation. Sterling has lost around 3% in value against the dollar in 2024, mostly due to traders drastically reassessing how much U.S. interest rates might fall by this year. Investors are pricing in roughly two quarter-point cuts from the Bank of England this year, compared with fewer than two from the Federal Reserve and with nearly three from the European Central Bank. Against the euro, the pound is still up 0.45%, but its advantage over the single European currency has eroded sharply in the last week or so. The euro was up 0.1% against the pound at 86.21 pence. The next risk event for sterling is the release of preliminary business activity surveys for April on Tuesday. The UK is currently top of the leaderboard of major economies in terms of purchasing managers' surveys. With a reading of 53, above the 50 line that separates growth from contraction, the UK has outperformed even the United States every month so far this year. The dollar held steady against the euro and the yen on Monday after the most volatile week of trading for the currency market in months, as investors assessed policy and geopolitical developments. The market is laser-focused on the yen ahead of the Bank of Japan's (BOJ) policy review on Friday. The yen traded around 154.69 per dollar, a whisker away from last week's 34-year low of 154.79 and close enough to the 155-level that is next on traders' radars for possible intervention by Japanese authorities.  The dollar's trade-weighted index was above 106, but off the five-month highs hit last week after comments from Federal Reserve officials and a run of hotter-than-expected inflation data forced a paring back of rate cut expectations. A cooling in Middle East tensions, which had driven the dollar, gold and crude oil prices sharply higher on Friday and battered stock markets, also helped temper volatility.