Rupee Opens Higher As Exit Polls Predict Modi Win

Rupee Opens Higher As Exit Polls Predict Modi Win

20 May 2019 09:10 AM

USD/INR – The Indian rupee opened higher against the dollar after most exit polls forecast a second term for Prime Minister Narendra Modi. The rupee opened at 69.4950 versus the dollar compared with its previous close of 70.22. Most exit polls released yesterday showed that the ruling Bharatiya Janata Party-led National Democratic Alliance will retain power. Eight out of 10 exit polls predicted that the NDA would win more than the 272-seat majority mark, while two forecast that the Modi-led alliance would fall just short of the majority. At the higher end of the estimates, the NDA was expected to win around 350 sets and the lowest projection was of it winning 242 seats.

EUR/USD – The euro was a shade higher at $1.1161, recovering slightly after dropping last week on comments from Italian Deputy Prime Minister Matteo Salvini that European Union rules harm his country. Investors' focus this week is on the May 23-26 elections for the new European Parliament. Market participants will also eye European readings for a private purchasing managers' index that measures activity in services and manufacturing due on Thursday, after Germany last week returned to growth in the first quarter of 2019. EUR/USD continues to trade with an offered tone despite a mitigation of some bearish risks. President Trump's decision to delay auto tariff imports up to six months was welcome relief for those concerned about potentially escalating U.S.-EU trade tensions.

GBP/USD – GBP/USD is limping into the weekend at 4-month lows by 1.2730 as Brexit uncertainties continue to cloud UK economic recovery. Cable, which had been bolstered by conciliatory comments by Labour's Corbyn on May 10, has fallen from last Monday's high at 1.3040. The breakdown of talks between Labour and the Tories puts cable, specifically GBP/USD longs, in the category of "dead money". With the new Brexit deadline on Oct 31 and PM May's current Brexit plan not up for vote until early June, GBP/USD longs are scrambling to exit positions as there is little hope or urgency to get a deal done. This lethargy with regard to a Brexit resolution opens the way for continued GBP/USD weakness. With little hope of UK parliamentarians agreeing to a plan, no-deal Brexit sentiment rises, putting further pressure on GBP/USD.

USD/JPY – Against the yen, the dollar gained 0.1% to 110.19, building on last week's gains, when it booked its first weekly gain against the Japanese currency in five weeks. The yen dipped on a broad improvement of risk appetite among investors. Data showed the Japanese economy was stronger than expected in the last quarter. Japan's economy grew at an annualised rate of 2.1%, government data showed, accelerating slightly from the previous quarter's growth backed by net export gains. The preliminary reading for first-quarter gross domestic product compared with the median estimate of a 0.2% annualized contraction.

Currency Range for today

Currency Pair Lower Upper
USD/INR 69.20 69.90
EUR/INR 77.15 78.35
GBP/INR 88.10 89.30
JPY/INR 0.6280 0.6360

No important data releases today

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