FX – WEEKLY UPDATE :
FX Weekly Currency Score Week 17
Weekly SYNOPSIS: 19/04/2024
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|
Currency Pairs |
WEEK CLOSE |
Last week CLOSE |
% change |
|
USD/INR |
83.46 |
83.47 |
|
|
EUR/INR |
88.89 |
89.12 |
-0.25 |
|
GBP/INR |
103.79 |
104.42 |
-0.60 |
|
JPY/INR |
54.09 |
54.42 |
-0.60 |
Brent Crude closed at USD 87.50 VS previous prior week close of USD 90. Gold closed at USD 2392. Nifty closed at 22513 vs prior week close of 22147. 10 Year G-SEC Yield is now at 7.18%.
Major developments: USDINR traded in the 83.42-83.62 range last week and closed at 83.46, loss of 1 ps for USD w/w. EUR declined 0.25% w/w and GBP declined 0.60% w/w against Rupee. Indian benchmark Equity declined 1.62% w/w. 10 Year G-SEC Yield closed this week at 7.18%. 1-year fwd premia is at 1.59% p.a.
Rupee declined to 83.61 after stagnating at around 83.45 for a significant period of time. USD’S strength against majors is likely to weigh down on Rupee, but decline will be controlled by RBI.
Rupee’s movement was tracking broad gains in USD index. However, RBI seems to have sold USD at higher levels on Friday. The pair has propensity to move towards 84.10, but the pace of movement will be controlled by RBI. Geo political tensions and USD’S strength against majors could contribute to Rupee weakness.
March exports declined marginally to USD 41.68 bn, while imports fell to USD 57.28 bn. March trade deficit narrowed to USD 15.6 bn. For the full year, trade deficit is at USD 240.16 bn. Overall deficit (trade+services) narrowed to USD 78.17 bn, thanks to surplus in services exports. Services surplus was at USD 162.06 bn. Overall merchandise exports dipped to USD 437.06 bn from previous year data of USD 451.07 bn. Imports also declined 5.4% in FY23-24 to USD 677 bn.
FX reserves stood at USD 643 bn, as on April 12 th. Reserves decreased by USD 5 bn w/w.
In April, FPI’S have sold Rs 7608 Cr of Equities and sold Rs 10896 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: USD gained, stocks declined steeply as markets were on edge due to Geo political tensions and lowering of rate cuts expectations in US. Though Middle east tensions seems to be contained for the present, there is a fear of escalation. In addition, higher than expected inflation has tempered rate cut hopes. Fed members comments also confirms that there will be few rate cuts in smaller size than what was hoped earlier. Fed Chairman hinted that restrictive monetary policy may stay for a little longer than what was hinted at the beginning of this Year. Recently released retail sales data also confirms strong consumer spending and that economy is resilient to withstand higher rates.
Recent escalations between Israel and Iran had investors on edge, as they could have far-reaching impacts on global inflation and supply chain
US S&P 500 logged its most substantial weekly decline since March of the previous year, with a loss exceeding -3%. NASDAQ wasn’t spared either, enduring -5.5% drop, marking its steepest weekly fall since November 2022. Indian Stocks also declined, tracking negative global cues.
Pound fell steeply on Friday as BOE Dy Governor hinted at aligning monetary rate policies more closely to EU. This implies that BOE may go for rate cuts, if EU does.
Eurozone CPI was finalized at 2.4% yoy in March, down from February’s 2.6% yoy. CPI core was finalized at 2.9% yoy, down from prior month’s 3.1% yoy. UK CPI slowed from 3.4% yoy to 3.2% yoy in March, above expectation of 3.1% yoy. CPI core decelerated from 4.5% yoy to 4.2% yoy, above expectation of 4.1% yoy.
Currency technical levels: USDINR: 83.32/83.17 (Supports), 83.70/84.10 (resistance),
EURINR:89.70/90.10(Resistance)
GBPINR: Supports: 103( supports), Resistance:104.85/105.10(
JPYINR: Resistance:55.30/56.50, Supports: 53.60 (support).
Hedging advise: USDINR imports be hedged on decline . EUR nearby receivables be covered at 89.70.GBP receivables can be covered at 105+.
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