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Tag: rupee

  • Sensex, Nifty Seen Lower With Earnings In Focus

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    Indian shares look set to open on a sluggish note Friday after TCS and Tata Elxsi reported disappointing earnings results.

    TCS beat revenue estimates for Q2FY26, but severance costs dented profit. Tata Elxsi reported a fourth straight quarter of widening profit fall as its key transportation business declined amid the impact of U.S. tariffs.

    Benchmark indexes Sensex and Nifty rose around half a percent each on Thursday, after having snapped their four-day winning run the previous day. The rupee fell by 4 paise to close at 88.79 against the dollar.

    Foreign institutional investors (FIIs) were net buyers of shares to the extent of Rs 1,308.16 crore on Thursday, while domestic institutional investors (DIIs) net bought shares to the tune of Rs 864.36 crore, according to provisional exchange data.

    Asian stocks were lower this morning on concerns over stretched valuations, even as Seoul markets rose sharply as traders returned from holidays.

    The dollar dipped after a four-day rally took it to its strongest level since July. Gold was slightly lower below $4,000 an ounce after having fallen 2 percent on Thursday, the most since August.

    Oil steadied after falling more than 1 percent in the previous session amid cooling tensions in the Middle East.

    Overnight, U.S. stocks ended slightly lower after a week of record-breaking gains. Caution crept in as IMF and JPMorgan Chase warned of potential market correction, and the U.S. government shutdown entered its ninth day with no end in sight.

    Meanwhile, with three weeks until the Federal Reserve’s next policy meeting, New York Federal Reserve President John Williams signaled he would be comfortable cutting rates again.

    On the contrary, Fed Governor Michael Barr leaned heavily into the risks of inflation. Fed Chair Jerome Powell provided no new policy updates.

    The tech-heavy Nasdaq Composite finished marginally lower, the S&P 500 gave up 0.3 percent and the Dow shed half a percent.

    European stocks fell from record levels on Thursday amid renewed concerns about the political situation in France.

    The pan-European Stoxx 600 dropped 0.4 percent. The German DAX edged up marginally, while France’s CAC 40 slid 0.2 percent and the U.K.’s FTSE 100 dipped 0.4 percent.

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  • Sensex, Nifty Seen Tad Higher With Earnings In Focus

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    Indian shares are likely to open a tad higher on Thursday as investors brace for the September-quarter earnings season, with TCS, India’s largest IT services company, scheduled to report results after the market close later today. Tata Elxsi and GM Breweries are also due to report their quarterly earnings results.

    Meanwhile, Union Commerce and Industry Minister Piyush Goyal on Wednesday said no power on earth can stop India from becoming a developed nation by 2047 and that the government is taking a series of initiatives to promote the domestic economy, build infrastructure and expand international trade.

    He also said that India and the U.S. are in continuous dialogue on the proposed bilateral trade agreement, and all possibilities exist to meet the November deadline for concluding the talks.

    Benchmark indexes Sensex and Nifty ended down around 0.2 percent each on Wednesday to snap their four-day winning run. The rupee fell by 3 paise to close at 88.80 against the U.S. dollar.

    Foreign institutional investors (FIIs) were net buyers of shares to the extent of Rs 81 crore on Wednesday, while domestic institutional investors net bought shares to the tune of Rs 330 crore, according to provisional exchange data.

    Asian markets were mixed this morning as China returned from holidays. Traders are seeking clues about potential policy changes after the Golden Week results indicated that consumer spending in China remains weak.

    The dollar held steady and was on track for its best week in nearly a year as the U.S. government shutdown stretched into a ninth day.

    Gold traded lower but still traded above $4,000 an ounce. Oil prices fell as Israel and Hamas agreed to the “first phase” of U.S. President Donald Trump’s peace plan to pause fighting and release at least some hostages and prisoners, making a major breakthrough in the U.S.-brokered negotiations to end their two-year war.

    Overnight, U.S. stocks ended broadly higher, with tech stocks leading the way after reports suggested that Nvidia will invest $2 billion into a $20 billion equity and debt funding round for Elon Musk’s AI venture.

    On the economic front, data showed home loan applications in the U.S. declined for a second week in a row, but at a slower pace.

    The minutes covering the Fed’s Sept. 16-17 policy meeting signaled more rate cuts could be in play for the rest of 2025 despite steep divisions within the central bank about the outlook for jobs and inflation.

    The tech-heavy Nasdaq Composite and the S&P 500 gained 1.1 percent and 0.6 percent, respectively to reach new record closing highs while the narrower Dow ended marginally lower.

    European markets closed on a firm note on Wednesday after the European Commission proposed measures to protect the EU’s domestic steel industry.

    The pan-European Stoxx 600 advanced 0.8 percent. The German DAX climbed 0.9 percent, France’s CAC 40 rallied 1.1 percent and the U.K.’s FTSE 100 added 0.7 percent.

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  • Rupee ends almost flat on likely RBI intervention

    Rupee ends almost flat on likely RBI intervention

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    The Rupee ended almost flat on Wednesday despite robust dollar demand from corporates, especially oil companies, as RBI likely intervened in the non-deliverable forward market to prevent it from depreciating to a new low.

    The Rupee closed at 83.5450 per Dollar against Tuesday’s 83.5650, which was an all time closing low

    Traders say that the RBI probably sold Dollars in the NDF market to stem the rupee’s fall in the spot market.

    To a question on the proposed expansion of RBI’s intervention kit, Governor Shaktikanta Das, at the last monetary policy press meet, said: “Our intervention in the NDF (non-deliverable forward) market has also undergone a change. We are now very clear and explicit that the RBI is there in the forward market, and we are there. “

    In his monetary policy statement, Das emphasised that the Indian rupee (INR) has moved in a narrow range with low volatility during 2024-25 so far (up to June 5), despite trading under pressure amidst foreign portfolio investment (FPI) outflows.

    The relative stability of the INR bears testimony to India’s sound and resilient economic fundamentals, macroeconomic and financial stability, and improvement in the external outlook, he added.

    Meanwhile, the 10-year benchmark (7.10 Government Security 2034) opened little changed at 7.01 per cent despite a fall in treasury yields overnight (following better than expected treasury auction), according to Nuvama said in a report.

    “Yields were ranged through the day as market participants remained on sidelines awaiting CPI inflation in India and the US. In addition, caution ahead of the FOMC meeting outcome also kept participants on the sidelines,” it added.

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  • Forex reserves + Rupee

    Forex reserves + Rupee

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    The Reserve Bank of India’s move to absorb most of the Dollar (USD) flows in a bid to prevent a sharp appreciation of the Rupee (INR) has led to a record build up in forex reserves, which stood at $642.49 billion as of March 15.

    India holds the fourth largest foreign exchange (forex/Fx) reserves in the world. China, Japan and Switzerland are the top three holders of forex reserves.

    India’s Fx reserves have surpassed the previous record of $642.45 billion in September 2021.

    “We believe India’s growth resilience, along with the forthcoming bond index inclusion (worth about $30 billion of flow and nearly half of India’s annual Current Account balance), will keep the capital account in a surplus.

    “We estimate a reasonable BOP (balance of payments) surplus of about $40 billion in FY24 and $20 billion in FY25, which would bode well for FX reserve accretion,” said Tanvee Gupta Jain, Economist; Nihal Kumar, Associate Economist; and Rohit Arora, Strategist; UBS Securities India.

    Reflecting the CA balance forecast revisions (estimating India’s CAD/ current account deficit narrowing to less than 1 per cent of GDP in FY24 vs 1.2 per cent forecast earlier; and CAD modestly rising to 1.3 per cent in FY25), UBS has shifted its USD/INR end-FY25 forecast from 84 to 82.

    Suman Chowdhury, Chief Economist and Head- Research, Acuité Ratings & Research, said the Indian rupee has moved within a narrow trading band of 81.6-83.5 in FY24 so far.

    This marks the tightest trading band for the currency in 29 years, something that is also reflected in its current levels of extremely subdued volatility.

    “While a mild strength in the INR was visible over the last one month, a rise in volatility driven by the demand for dollars during the fiscal year end and the pressure on the Chinese yuan may lead to a weakness in the INR towards the end of March.

    “We continue to expect INR to post a moderate weakness towards 84.5-85.0 levels by March 2025 (given the delay and the relatively moderate rate cuts in the developed nations along with RBI’s active management of the currency to keep it reasonably anchored to the real effective exchange rate),” Chowdhury said.

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  • Stablecoins pose existential threat to policy sovereignty, CBDC preferable: RBI

    Stablecoins pose existential threat to policy sovereignty, CBDC preferable: RBI

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    While stablecoins linked to underlying currencies are more feasible than private assets and offer an alternative to CBDC (central bank digital currency), they are only beneficial to certain economies to which they are linked, according to RBI Deputy Governor T Rabi Sankar.

    Stablecoins provide an international benefit, especially to linked economies such as US and Europe but are not necessarily good for countries like India owing to the transfer of seigniorage to private issuers to the extent that it replaces the use of the rupee in the economy.

    Also read: CBDC: A calibrated approach needed

    “That is one aspect we have to take into account. What happens to India’s capital regulations or monetary policy. If large stablecoins are linked to some other currency, there is a risk of dollarisation,” Sankar said at an event organised by IBA.

    “We have to be very careful about allowing these sorts of instruments. Stablecoins can provide some of this but they are only useful to a few countries that are linked. From the past experience in other countries, it is an existential threat to policy sovereignty,” he said.

    A stable solution then is for every country to have its own CBDC and for countries to then create a mechanism where the CBDCs can interface and transact with each other, he said, adding that while CBDC is being used a policy instrument in several jurisdictions, the RBI has no plan to do so.

    Cross-border transactions

    On the use cases of CBDC, Sankar said the same is required for global transactions if nothing else, adding that cross-border transactions are the biggest emerging use case at the moment.

    “The current global payment system… the corresponding banking arrangement that exists has features that add inefficiencies,” he said.

    This is because there are only a few entities that all transactions are routed through, which translates to higher costs for even small value cross-border remittances, and thus the system needs to be diversified.

    “As per World Bank estimates, a cross-border small value transaction, remittance transaction is at 6 per cent. That’s extremely high.”

    Urging banks to relook their remittance structure, Sankar said that given the technology and innovation available today, banks can no longer justify the high foreign exchange margins and remittance charges.

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  • India should allow gradual rupee weakening, use fx reserves ‘judiciously’ – govt adviser

    India should allow gradual rupee weakening, use fx reserves ‘judiciously’ – govt adviser

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     India’s central bank should allow rupee to depreciate gradually and use foreign exchange reserves judiciously, the government’s chief economic adviser V. Anantha Nageswaran on Monday.

    Nageswaran comment on the rupee and foreign exchange reserves is the first official government comment since concerns about dwindling currency reserves emerged earlier this year.

    India’s foreign currency reserves have fallen from a peak of $642 billion to $531 billion partly due to dollar sales to support the rupee.

    “We should in the short-run allow the rupee to depreciate gradually and we should use forex exchange reserves judiciously,” Nageswaran said at an online event.

    With the economy likely to run a current account deficit of close to 3% of gross domestic product in the current financial year, analysts expect reserves to fall further.

    “We should augment foreign exchange reserves and that will help with any contingencies,” he added.

    He said the country currently had adequate reserves to deal with capital outflows.

    Financing India’s trade deficit would be the main challenge for the year even as there are signs of broader economic recovery, Nageswaran said.

    He said he expected growth to moderate to around 6.5% to 7% in the current fiscal year that started on April 1. The government in January had projected economic growth of 8% to 8.5% for the current fiscal year but since then most agencies including the Reserve Bank of India have cut their annual growth estimateS to around 7%.

    Nageswaran also said some central banks, including the Bank of Canada, European Central Bank, and the Reserve Bank of Australia, had indicated a less aggressive monetary policy that would help emerging nations.
     

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