Sep 25 2018

Rupee falls for second day tracking oil rally

Financial Market Overview

25th September, 2018

Evening Coffee

Rupee:-

  • The Indian rupee clocked a second session of losses against the dollar ahead of the Federal Reserve’s twoday policy meeting that begins today, as surging crude oil prices at near-four-year highs eclipsed a sharp turnaround in local shares.
  • The rupee ended at 72.69 to a dollar, against 72.63 at previous close. It fell to as much as 72.9650 intraday, within striking distance of its lifetime low of 72.99 hit last week. However, suspected central bank intervention through several public and private sector banks helped slow the pace of depreciation in the rupee.

 

Indian Equities:-

  • Indian shares snapped a five-session losing streak and ended higher on Tuesday, amid comments from LIC of India Chairman that authorities will ensure that Infrastructure Leasing & Financial Services, which defaulted on repayment to lenders and is dealing with a liquidity crisis, does not collapse.
  • The benchmark BSE index closed 0.96 percent higher at 36,652.06. The broader NSE index gained 0.91 percent to 11,067.45.

 

Global Markets:-

  • European markets are higher today with shares in London leading the region. The FTSE 100 is up 0.53% while Germany’s DAX is up 0.20% and France’s CAC 40 is up 0.10%.
  • Market participants expect a quarter-percentage rate hike from the Fed, accompanied by hawkish commentary. The one-year dollar-rupee forward premium was at 3.24 rupees, from its previous close of 3.25 rupees.
  • Moving past the crucial $80-a-barrel mark, the benchmark Brent crude oil contract was trading at a near four-year high of $82.20, extending yesterday’s 3% gain and marking its largest jump since mid-June. Oil prices zoomed higher after major oil producers over the weekend refused to increase production in spite of U.S. President Donald Trump’s call for containing oil prices.
  • The euro inched higher on Tuesday despite a European Central Bank official playing down its President Mario Draghi’s comments a day earlier about relatively vigorous inflation. The euro had hit a 3-1/2 month high on Monday after Draghi expressed confidence in euro zone inflation and wage growth, before giving up most of those gains. The ECB’s chief economist said on Tuesday there was nothing new in Draghi’s comments, but the single currency managed to find strength.