FX – WEEKLY UPDATE :
FX Weekly Currency Score Week 20
Weekly SYNOPSIS: 10/05/2024
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|
Currency Pairs |
WEEK CLOSE |
Last week CLOSE |
% change |
|
USD/INR |
83.50 |
83.38 |
0.14 |
|
EUR/INR |
90.01 |
89.50 |
0.56 |
|
GBP/INR |
104.69 |
104.61 |
|
|
JPY/INR |
53.66 |
54.50 |
-1.54 |
Brent Crude closed at USD 82.50 VS previous prior week close of USD 82.70. Gold closed at USD 2360. Nifty closed at 22055 vs prior week close of 22475. 10 Year G-SEC Yield is now at 7.13%.
Major developments: USDINR traded in the 83.42-83.52 range last week and closed at 83.50, gain of 12 ps for USD w/w. EUR climbed 0.56% w/w and GBP closed flat w/w against Rupee. Indian benchmark Equity declined 1.86% w/w. 10 Year G-SEC Yield closed this week at 7.13%. 1-year fwd premia is at 1.69% p.a.
Rupee ‘s trading range was subdued. May FPI inflows are negative. USD’S strength against majors is likely to weigh down on Rupee, but decline will be controlled by RBI.
FX reserves stood at USD 641.50 bn, as on May 3 rd. Reserves increased by USD 3.6 bn w/w.
In May till date, FPI’S have sold Rs 18933 Cr of Equities and sold Rs 1333 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.
There were no major themes last week. Corporate results were less encouraging, putting pressure on Equities and indices. CPI and IIP data are important data events for the coming week.
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: It was a quiet week for FX markets, but Equity markets soared higher. Global sentiments were boosted by rate cut hopes and major central banks moved closer to rate cut. Economic data was also very robust. Fed indicated that there is no chance of rate hike and decision will be on cuts or no cuts immediately. However, Univ of Michigan survey on inflation expectations showed that inflation expectation has inched higher from 3.2% to 3.5% in May.
According to the minutes from ECB’s April meeting, while a “very large majority” preferred to hold rates steady for another session, a few members were “sufficiently confident” to support a rate cut at that time. The meeting accounts suggested that it is “plausible that the Governing Council would be in a position to start easing monetary policy restriction at the June meeting.”
UK has emerged out of recession with GDP climbing 0.4% m/m, best ever data since 2021. BOE meeting details signaled dovishness with some members voting for rate cut.
US CPI and retail sales data will be keenly watched.
Currency technical levels: USDINR: 83.35/83.17 (Supports), 83.70/84.10 (resistance),
EURINR:90.10(Resistance),89.
GBPINR: Supports: 103.90/102.60( supports), Resistance:105.30(Resistance).
JPYINR: Resistance:54.85, Supports: 52.10 (support).
Hedging advise: USDINR imports be hedged on decline . EUR nearby receivables be covered at 90.10.GBP receivables can be covered at 105+.
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