Weekly SYNOPSIS:

Currency Map:

Currency Pairs	WEEK CLOSE	PRIOR WEEK CLOSE	% change
USD/INR	83.92	83.95	-0.03
EUR/INR	92.95	93.31	-0.38
GBP/INR	110.22	110.63	-0.37
JPY/INR	59.49	58.95	0.91

Brent Crude closed at USD 71.50 VS previous week close of USD 71. Gold closed at USD 2576. Nifty closed at 25356 vs prior week close of 24852. 10 Year G-SEC Yield is now at 6.91%. Major developments: USDINR traded in the 83.85-83.99 range last week, and Rupee gained 3 ps against USD w/w. EUR declined 0.38% w/w and GBP declined 0.37% w/w against Rupee. Indian benchmark Equity indices climbed 2.02% w/w. 10 Year G-SEC Yield closed at 6.91%. 1-year fwd premia is at 2.26% p.a. FX reserves stood at USD 689 bn, as on Sep 6 th. Reserves climbed US D 5.25 bn w/w. In Aug , FPI’S have bought Rs 18386 Cr of Equities and bought Rs 482 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 fwd premia has already touched 2.26% p.a. for 1 year. It is expected to expand to 2.5% by Dec end as Fed starts cutting rates. Indian CPI inflation rose marginally to 3.65% in Aug. Food inflation rose 5.66%. Core inflation remained steady at 3.5%. IIP climbed 4.83% in July. Mfrg climbed 4.6% and Electricity sector climbed 7.9% and Mining growth decelerated to 3.7%. Growth accelerated in capital goods (12 per cent) and intermediate goods (6.8 per cent). Growth in consumer durables (8.2 per cent) decelerated while consumer non-durables (-4.4 per cent) contracted, reflecting tepid consumer demand in the economy. USDINR could trade in the 83.75-84.30 range in coming months. Indian Equity markets climbed, tracking rally in Global asset markets. Hedging advise: Imports be hedged on decline to 83.75. Exports be hedged in the 84.30+ range for less than 3 months. Global developments : Gold rallied, US Equities continued its bull run and US Yields fell further on speculation of 50 bps cut by Fed. Fed is meeting incoming week and could initiate the process of series of rate cuts. USD maintained its cautious movement as ECB cut rates and signaled data dependent approach. Overall in the currency markets, Yen ended as the strongest performer last week, supported by expectations that BoJ will maintain its gradual tightening path. While the pace of future rate hikes remains uncertain, the narrowing interest rate differential between Japan and other major economies continues to lend support to Yen. Gold is maintaining its strong uptrend, supported by Central bank purchases, geo political tensions and rate cuts. Soft labor market and declining inflation trend have set the stage for Fed’s rate cut decisions. The question is whether Fed will move cautiously or start with a bigger rate cut. Fed’s Summary of Economic Projections will show a median of 75 basis points worth of cuts this year, up from the 25 bps that was expected in July. ECB Governing Council said it had lowered its deposit facility rate — the mechanism through which it steers monetary policy — by 25 basis points to 3.5%. ECB President Christine Lagarde stressed that the central bank was not “committed” to a particular rate path and will remain data-dependent prior to making future policy moves. BOE rate decision will also be known in coming week. Currency technical levels: USDINR: 83.76/83.65 (Supports), 84.10/84.30 (resistance), EURINR:94(Resistance),92.60/91.65(Support), GBPINR: Supports: 108.50( supports), Resistance:111.35(Resistance). JPYINR: Resistance:59.50/61, Supports: 58.50/57.65 (support). Hedging advise: USDINR imports be hedged on decline to 83.75. EUR nearby payables be covered on dips TO 91.65. GBP receivables can be covered at 111+.

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