FX – WEEKLY UPDATE :
WEEKLY SYNOPSIS: 06/10/2023
Currency Map:
|
Currency Pairs |
SEP CLOSE |
AUG CLOSE |
% change |
|
USD/INR |
83.24 |
83.08 |
0.19 |
|
EUR/INR |
87.68 |
87.94 |
-0.29 |
|
GBP/INR |
101.29 |
101.67 |
-0.37 |
|
JPY/INR |
55.88 |
55.81 |
0.12 |
Brent Crude closed at USD 84.50 VS prior week close of USD 92. Gold closed at USD 1832. Nifty closed at 19653 vs prior week close of 19638. 10 Year G-SEC Yield closed at 7.33%.
Major developments: USDINR traded in the 83.16-83.29 range last week and closed at 83.24, gain of 16 ps for USD as compared to prior week close of 83.08. EUR declined 0.29% w/w and GBP declined 0.37 w/w against Rupee. Indian benchmark Equity index closed almost flat w/w. 10 Year G-SEC Yield closed at 7.33%. 1-year fwd premia is at 1.86% p.a.
FX reserves stood at USD 587 bn as on Sept 29 th. In Oct, FPI’S have sold Rs 5132 Cr of Equities and bought Rs 1222 Cr of debt . In 2022-23 fiscal year, FII’S have net sold Rs 27593 Cr of Equities and have net bought Rs 838 Cr of debt.
USDINR volatility compressed further, aided by RBI intervention at higher levels. Fwd premia edged higher to 1.86%.
RBI held rates steady. GDP and inflation forecast remains unchanged at 6.5% and 5.6% for this fiscal. Inflation outlook is clouded due to lower Kharif sowing and high Global food prices.
GST Collections climbed 10% y/y to Rs 1.62 lac Cr. Gross receipts from GST in the first half of the current fiscal improved 11% from the year-ago period to ₹9.92 trillion. The average monthly gross collection this fiscal is ₹1.65 trillion, which is 11% more than in the year-ago period.
Indian PMI(mfrg) dipped marginally to 57.5 from 58.6 in Aug. This is the 27 th straight month of manufacturing expansion.
Indian 10 Year bond yields surged to 7.33% as RBI hinted at bond sales/ OMO operations to manage liquidity.
Hedging advise: Imports be hedged on declined to 82.85. Exports be hedged gradually.
Global developments: US Yields climbed to 4.79% after a very strong US jobs data. Slew of strong economic data and higher energy prices may force Fed to do another round of rate hike before the year end. Strong jobs data, turn around in manufacturing data shows that Fed may have more job to do to cool inflation. US Yield surge can also be attributed to spiraling fiscal deficit.
US non-farm payroll employment rose 336k in September, well above expectation of 168k. That’s also well above the average monthly growth of 267k over the prior 12 months. Prior month’s figure was also revised up from 187k to 227k.Unemployment rate was unchanged at 3.8%, versus expectation of a drop to 3.7%. Labor force participation rate was unchanged at 62.8%.Average hourly earnings rose 0.2% mom to USD 33.88, below expectation of 0.3% mom. Over the past 12 months, average hourly earnings have increased by 4.2% yoy.
US ISM(mfrg) is in contraction mode, but the pace of decline has slackened, indicating a possible turnaround. This is the best reading in last 3 months. ISM(services) remained in expansion mode.
US Congress passed a stop gap funding bill, which has avoided a possible shutdown.
ECB Chief said that current interest rates are at the level to return inflation to target in a timely manner. She also laid out three criteria for future decisions. She detailed these criteria as: “the inflation outlook, the dynamics of underlying inflation and the strength of monetary policy transmission.”
Euro declined to 1.0450, GBP fell to 1.2035 and Yen weakened above 149. US Equity markets had a roller coaster ride.
Gold declined steeply . Crude declined after steep rally, despite supply cuts.
Technically, Euro is likely to decline to 1.0250 and GBP is also set for further decline. US CPI is the next important data event.
Currency technical levels: USDINR: 82.80/82.65 (Supports), 83.30/83.47 (resistance),
EURINR:88.20/89(Resistance),
GBPINR: Supports: 100.25/99( supports), Resistance:102.25/103.85(
JPYINR: Resistance:57/59.50, Supports: 55.40/54.50 (support).
Hedging advise: USDINR imports be hedged at 82.80 on decline. EUR and GBP exports can be covered on rally to 88.90/89 and 102.25/103.50+ respectively.