The Indian rupee ended the session lower at 83.03/04 levels compared to its opening at 82.9250/9350 levels after touching the low of 83.0550/0650 levels, despite a rally in the Chinese Yuan and a softer U.S. dollar as the domestic unit’s strength was capped by dollar demand from oil companies and importers. Rupee traded in the range of 82.8375-83.0550 levels today.
The onshore Chinese Yuan rallied by about 0.7% to 7.31 against the U.S. dollar, while the Thai baht led gains among other Asian currencies. Although the Yuan received a boost from a stronger yen, it rallied even further after China’s foreign exchange self-regulatory body said it would resolutely fend off risks of the Yuan weakening too much. Indian government bond yields up tracking U.S. peers and rise in swap rates.
India’s Nifty 50 hit a lifetime high today on the back of a record-setting rally powered by local investors that saw the benchmark briefly breach the 20,000-point milestone for the first time ever. The blue-chip Nifty 50 rose as much as 0.95% to 20,008.15, led by financials, auto and metals stocks, while the S&P BSE Sensex settled 0.79% higher at 67,127.08. In the forward segment 1mth, 3mth and 6mth annualized premia ended the day at 1.38%, 1.45% and 1.52% respectively.
The pound rose on Monday, taking advantage of a hefty decline in the dollar against the Japanese yen that spilled into other currencies. Against the yen, the pound fell by almost 1% after Bank of Japan Governor Kazuo Ueda at the weekend said the central bank could end its policy of negative interest rates, which has undermined the yen, when achievement of its 2% inflation target is in sight. The dollar bore the brunt of the rush into the yen, falling by the most in two months against the Japanese currency. Sterling was last up 0.4% against the dollar at $1.2521. Against the euro, the pound put in a slightly less robust performance, rising by 0.2% to 85.70 pence. The pound fell by almost 1% against the dollar last week, as a combination of stronger economic data and weaker investor confidence fuelled a push into the U.S. currency. It has lost about 5% in value since July’s 15-month peak, but it is still up by over 20% since last September’s record lows and is up 3.5% so far this year, pitting it against the Swiss franc, the top performer against the dollar in 2023, which is up 3.7%. The Bank of England meets next week to discuss monetary policy. Traders are attaching a 70% chance of a quarter-point rise in the Bank Rate to 5.50%. But they have slashed the chances of another rate rise after that, marking a sharp turnaround from just a week ago, when money markets showed UK rates were expected to peak at closer to 5.7% by March. Part of sterling’s resilience this year has been the perception that the BoE has a lot more work to do to bring down inflation and will need to raise interest rates more than many other central banks.