FX – WEEKLY UPDATE :
FX Weekly Currency Score Week 18
Weekly SYNOPSIS: 26/04/2024
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|
Currency Pairs |
WEEK CLOSE |
Last week CLOSE |
% change |
|
USD/INR |
83.35 |
83.46 |
|
|
EUR/INR |
89.43 |
88.89 |
0.60 |
|
GBP/INR |
104.25 |
103.79 |
0.44 |
|
JPY/INR |
53.43 |
54.09 |
-0.62 |
Brent Crude closed at USD 89.40 VS previous prior week close of USD 87.50. Gold closed at USD 2338. Nifty closed at 22419 vs prior week close of 22147. 10 Year G-SEC Yield is now at 7.20%.
Major developments: USDINR traded in the 83.27-83.45 range last week and closed at 83.35, loss of 11 ps for USD w/w. EUR climbed 0.60% w/w and GBP climbed 0.44% w/w against Rupee. Indian benchmark Equity climbed 1.22% w/w. 10 Year G-SEC Yield closed this week at 7.20%. 1-year fwd premia is at 1.69% p.a.
Rupee ‘s trading range was subdued. April FPI inflows are negative. Decline in FX reserves points to USD sales by RBI. USD’S strength against majors is likely to weigh down on Rupee, but decline will be controlled by RBI.
Indian PMI(mfrg) climbed to 59.1 and PMI(services) climbed to 61.7. PMI(composite) climbed to 62.2, highest reading since June 2010.
FX reserves stood at USD 640.33 bn, as on April 12 th. Reserves decreased by USD 2.8 bn w/w.
In April, FPI’S have sold Rs 8659 Cr of Equities and sold Rs 15362 Cr of debt . In FY 23-24, FII’S have net bought Rs 206279 Cr of Equities and have net bought Rs 123120 Cr of debt.
USDINR is expected to move lower to 84.10 with supports at 83.27/83.16.
Hedging advise: Imports be hedged on decline.
Global developments: US markets showed resilience despite weaker than expected GDP data and stronger inflation. High investor confidence backed by strong consumer spending lifted markets. This consumer resilience suggests sustained demand that could keep inflation at elevated levels, keep Fed’s hands off from aggressive monetary policy easing.
The overall market dynamics argues that expectation of fewer Fed rate cut, or even no cut this year at all, is well priced in, and absorbed by investors
USD continued to remain strong despite feeble attempts of recovery by crosses. Yen declined sharply as investors felt that BOJ is not serious in intervention.
FOMC is meeting this week. US ISM and EU CPI data are important events in upcoming week.
US real GDP grew at an annualized rate of 1.6% in Q1, missing expectation of 2.1%, sharply lower than Q4’s 3.4%. Price index for gross domestic purchases increased 3.1% in Q1, compared with an increase of 1.9% in the Q4. Personal consumption expenditures (PCE) price index increased 3.4%, compared with an increase of 1.8%. Excluding food and energy prices, PCE price index increased 3.7%, compared with an increase of 2.0%.
US 10 Year Treasury yields jumped to 4.71%.
UK PMI Composite rose from 52.8 to 54.0, also an 11-month high. EU PMI Composite rose from 50.3 to 51.4, also an 11-month high. German Ifo Business Climate rose from 87.8 to 89.4 in April, above expectation of 88.5. Ifo said, “Companies were more satisfied with their current business. Their expectations also brightened. The economy is stabilizing, especially thanks to service providers.”
ECB Vice President indicated barring any surprises, a June rate cut is a “fait accompli.”
Bundesbank President and ECB Governing Council member, said that if data in the next six weeks bolster confidence in achieving ECB’s 2% inflation target, he would support a reduction in interest rates in June. However, he emphasized that “such a step would not necessarily be followed by a series of rate cuts.”
Currency technical levels: USDINR: 83.27/83.17 (Supports), 83.70/84.10 (resistance),
EURINR:89.50/90.10(Resistance)
GBPINR: Supports: 102.60( supports), Resistance:104/105(Resistance)
JPYINR: Resistance:55.30/56.50, Supports: 51 (support).
Hedging advise: USDINR imports be hedged on decline . EUR nearby receivables be covered at 89.50/90.10.GBP receivables can be covered at 104.75+.
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