USD/INR pair bounced back from the support zone of 75.40 - 75.50
|After trading in a narrow range of 12 paise, USDINR pair ended the session at 75.50, lower by 8 paise from the previous close of 75.58. Nationalised banks on behalf of RBI were seen preventing downside. Global risk appetite turned weak after China passed the national security legislation for Hong Kong earlier today, which is seen jeopardising the region's autonomy and special status as a financial hub. The imposition of the security law on Hong Kong by China may prompt retaliation from the US. Market participants across the globe have been cautiously optimistic about economic recovery, given the expectations of monetary stimulus by major central banks on one hand and resurgence of COVID-19 cases on the other. Domestic indices erased all their intraday gains and ended up minor losses while the benchmark 10 year bond yield ended 2bps lower at 5.89%.
The pound weakened against the US dollar today post dismal GDP data and concerns over whether the UK will be able to reach a trade agreement with the European Union before the deadline ends on Dec 31 this year. The UK's GDP shrank 2.2% sequentially in the quarter ended March. This marked the largest quarterly fall in GDP growth during Jan-Mar in over 40 years. India posted a marginal current account surplus of $0.6 billion (0.1 per cent of GDP) in Q4 of 2019-20 on the back of lower trade deficit, along with higher remittances.
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