FX – WEEKLY UPDATE :
FX Weekly Currency Score Week 26
Weekly SYNOPSIS: 21/06/2024
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|
Currency Pairs |
WEEK CLOSE |
PRIOR WEEK CLOSE |
% change |
|
USD/INR |
83.56 |
83.54 |
|
|
EUR/INR |
89.54 |
89.55 |
|
|
GBP/INR |
105.81 |
106.37 |
-0.52 |
|
JPY/INR |
52.58 |
52.89 |
-0.58 |
Brent Crude closed at USD 85.50 VS previous month close of USD 82.20. Gold closed at USD 2321. Nifty closed at 23501 vs prior week close of 23465. 10 Year G-SEC Yield is now at 6.97%.
Major developments: USDINR traded in the 83.34-83.68 range last week, and Rupee closed flat against USD w/w. EUR closed flat w/w and GBP declined 0.52 w/w against Rupee.
Indian benchmark Equity climbed 0.15% w/w. 10 Year G-SEC Yield closed at 6.97%. 1-year fwd premia is at 1.58% p.a.
FX reserves stood at USD 653 bn, as on June 14 th. Reserves declined by USD 3 bn w/w.
In May till date, FPI’S have bought Rs 9992 Cr of Equities and bought Rs 11236 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.
Rupee declined on outflows related to Vodafone. Yuan weakness and crude Oil buying related flows also aided Rupee weakness.
USDINR and Equity markets stabilised after post poll results. Focus is now on US rate path, and Union budget to be presented in July.
RBI has till now controlled USDINR movement in a very tight range. It has absorbed FX inflows and stemmed Rupee gains in the past. With USD stagnating against majors, it is difficult to build a bearish narrative for Rupee. USDINR could trade in the broad 82.95-83.70 range in coming period.
Hedging advise: Imports be hedged on decline to 83.42/83.30. Exports be hedged in the 83.60+ range.
Global developments: US Consumer spending showed signs of losing momentum. The main takeaway is that consumers may finally be starting to yield to the pressures of elevated prices and higher borrowing costs. Fed members showed their reservation in cutting rates. They said that Fed is ready to respond depending the path the economy takes. Members noted that they expect “interest rates to come down gradually over the next couple of years”.
Focus is on US Personal spending and Core PCE data.
BOE maintained status quo. The central bank stated that, as part of the August forecast round, the Committee will review all available information to assess whether the risks from persistent inflation are receding. Based on this assessment, the Committee will determine how long the Bank Rate should be maintained at its current level. Some members of MPC felt that services inflation is a cause for worry and some felt that this will not alter economy’s disinflationary path. Overall impression is that BOE may deliver rate cut in Aug.
Swiss national bank delivered second rate cut this year. In the accompanying statement, SNB said “underlying inflationary pressure has decreased again”. The central will continue to monitor the development of inflation closely, and will “adjust its monetary policy if necessary.
Ifo institute upgraded German GDP growth to 0.4% in 2024, up from earlier estimate of 0.2%.
Currency technical levels: USDINR: 83.42/83.32 (Supports), 83.70 (resistance),
EURINR:90/90.90(Resistance),
GBPINR: Supports: 105.30/103.90( supports), Resistance:106.50/107(
JPYINR: Resistance:54.10, Supports: 52.70 (support).
Hedging advise: USDINR imports be hedged on decline to 83.42/83.30. EUR nearby receivables be covered in the 90-90.50 zone. GBP receivables can be covered at 106+.
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