RBI's bumper rate cut leaves rupee exposed to fresh depreciation risk
The Reserve Bank of India's surprise 50 basis point rate cut last week may have been a shot in the arm for growth, but it could come at a cost.Analysts quoted in a Reuters report warned that the move has left the rupee vulnerable to further depreciation by eroding foreign exchange forward premiums and weakening the currency's carry trade appeal.The rupee has already lagged behind its Asian peers in 2025, weighed down by tepid capital inflows. Now, with the RBI easing faster than the US Federal Reserve, the narrowing interest rate differential is expected to keep the rupee on the back foot.The fallout has been immediate. The 1-month USD/INR forward premium—sensitive to liquidity conditions—slipped to 7.5 paisa, its lowest since November. The 1-year premium, more closely tied to the U.S.-India rate gap, dropped to 1.5250 rupees, the weakest in nearly a year.Lower forward premiums make the rupee less attractive for carry trades, where investors borrow in low-interest-rate currencies to invest in higher-yielding ones. Exporters, who typically hedge their future receivables, may find less incentive to do so. On the other hand, importers—looking to cover near-term obligations—could ramp up hedging, further pressuring the market.The result? A more volatile rupee, with fewer buffers against global shocks.The RBI's 50 bps repo rate cut, well above the expected 25 bps, came alongside a reduction in the cash reserve ratio, signalling a strong shift toward growth-supportive policy amid subdued inflation.Mitul Kotecha, Head of FX and EM Macro Strategy Asia at Barclays, told Reuters that RBI's rate cut has reduced rupee's appeal significantly. 'In a market where carry is back in focus, that hurts.'Dhiraj Nim, FX strategist at ANZ Research, told the news agency that falling premiums are a 'mild added headwind' for the rupee. He warned that if India's growth momentum stalls, there may be room for yet another rate cut.Tune InMust Watch
advertisement
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Time of India
an hour ago
- Time of India
RCB to be sold after historic IPL 2025 win? Owner Diageo breaks silence
Image credit: BCCI/IPL Diageo India, the Indian branch of UK-based Diageo Plc and owner of the Royal Challengers Bengaluru (RCB) IPL franchise, has firmly rejected rumors of selling the team. In a letter addressed to the Bombay Stock Exchange (BSE) and its Surveillance Department on Tuesday, June 10, a Diageo India representative stated that the media reports suggesting a potential sale are purely speculative. "The company would like to clarify that the aforesaid media reports are speculative in nature and it is not pursuing any such discussion," Mital Sanghvi, the company secretary, informed the regulating body of the Indian Stock Market. "This is for your information and records." Go Beyond The Boundary with our YouTube channel. SUBSCRIBE NOW! According to a Cricbuzz report, Diageo's statement was in response to a query from the Bombay Stock Exchange (BSE), where the company is publicly listed. Since speculation about a possible sale of the RCB franchise began circulating, shares of United Spirits — the Diageo-owned company that holds RCB — have seen a notable uptick. On Tuesday, Bloomberg reported that Diageo is considering selling the RCB franchise. The report surfaced shortly after RCB's maiden IPL title win on June 3 — a milestone achieved after 17 years — followed tragically by an incident in Bengaluru on June 4, where celebrations turned fatal, leaving 11 dead and many injured. Virat Kohli's love for 'dhaba' food, priority for family & more | RCB bus driver shares stories Though Diageo officially dismissed the sale reports as "speculative," the ambiguity of their statement has sparked deeper speculation. A seasoned voice in India's sports business ecosystem suggested that 'being a public company, there will be a lot of pressure on reputational damage,' hinting that Diageo could be weighing its options more seriously than publicly admitted. There are also murmurs about Diageo valuing the RCB franchise at around USD 2 billion. While some industry insiders view that figure as inflated — especially when compared to Torrent's acquisition of Gujarat Titans at approximately INR 7500 crore (around USD 1 billion) — others disagree. Lalit Modi , the architect of the IPL, told Cricbuzz that a USD 2 billion valuation for RCB is quite realistic. 'A particularly special feeling': Andy Flower hails Virat Kohli, RCB after historic title win "I will not be surprised if it is sold for a higher price," he remarked, adding that comparing the RCB valuation to that of the newer Gujarat franchise isn't an apples-to-apples comparison. "I will not be surprised if it is sold for a higher price," he said , stating that the valuation of GT cannot be compared here since it was a one-year-old deal. The sale report remains speculative, as clarified by the Diageo official in the response to the BSE. "No decision is final and they may decide against selling the team, the people said, asking not to be named as the details are private," the Bloomberg report says.
&w=3840&q=100)
Business Standard
an hour ago
- Business Standard
Crypto's new trend: Publicly traded companies buying bunches of bitcoin
It's one of crypto's hottest trends: publicly traded companies buying bitcoin and then buying even more. President Donald Trump's media company just announced a plan to raise USD 2.5 billion to buy bitcoin, joining a growing number of so-called bitcoin treasury companies as the world's most popular crypto-currency hits all-time highs. The companies buy bitcoin for different reasons: Some hold it as a hedge against inflation or to signal support for the crypto-currency industry, while some firms have made using debt and stock sales to buy bitcoin their primary business strategy. The world at large has no idea what's happening and they're in for a big shock, Dylan LeClair, an executive at the Japan-based Metaplanet, which recently went from being a budget hotel firm to a bitcoin treasury company, said at a recent crypto conference. This is a one-way train, nothing is going to stop this. The massive increases in some firms' stock price may seem to validate LeClair's bravado, but there are plenty of warnings that a downturn in bitcoin's prices could lead to large selloffs. Here's a look at bitcoin treasury companies by the numbers: 582,000 That's how many bitcoins owned by MicroStrategy the undisputed goliath of bitcoin treasury companies. With nearly 3 per cent of the total bitcoin supply, MicroStrategy owns more bitcoins than every other bitcoin treasury company combined. It also owns more bitcoin than every nation state combined, according to the tracking site Now called Strategy, the software company first started buying bitcoin in 2020 with reserve cash. Now, its software business is a small part of a perpetual bitcoin-buying machine that uses a variety of strategies like selling shares or issuing debt to keep growing its bitcoin holdings. More than 3000 per cent That's how much MicroStrategy's stock price has increased in the last five years, compared to around 1,000 per cent gain in bitcoin and the 1,500 per cent jump for chipmaker and stock market darling Nvidia during that same period. The company's success has boosted the profile of MicroStrategy's founder and chairman, Michael Saylor, who has visited Trump at Mar-a-Lago and the White House while becoming bitcoin's enigmatic high priest. Bitcoin is a swarm of cyber hornets serving the goddess of wisdom, feeding on the fire of truth, exponentially growing ever smarter, faster, and stronger behind a wall of encrypted energy, Saylor said in a social media post. Saylor's success has also spawned many imitators. It's kind of shocking that it took someone four years after Michael Saylor started doing it to finally do it and pull the trigger and now it feels like everyone's pulling the trigger, said Eric Semler, the chairman of Semler Scientific, a healthcare company that started acquiring bitcoin last year. USD 90,000 That's the average purchase price of bitcoin for half of the 61 publicly traded bitcoin strategy companies, excluding bitcoin mining companies and bitcoin exchange-traded funds, according to a recent analysis by Standard Chartered. Geoff Kendrick, the bank's head of digital assets research, said in the report that restrictions on investors buying bitcoin directly help explain the popularity of bitcoin treasury companies, as their stocks can serve as bitcoin proxies. But as crypto becomes more mainstream, the case for investing in bitcoin treasury companies becomes weaker, Kendrick said. He added that bitcoin's volatility could force some newer bitcoin treasury companies to sell their holdings to satisfy their debts if it falls under the purchase price. The question then becomes, how much pain can companies withstand before being forced to sell their BTC? Kendrick said, referring to the symbol for bitcoin. Triple digits That's how much of a one-day percentage increase in stock prices firms have seen after recently announcing plans to hold other types of cryptocurrencies as corporate treasuries, highlighting how the appetite for such companies extends beyond bitcoin. SharpLink Gaming, a gambling marketing firm, saw its share price increase by more than 400 per cent after it announced plans to buy up to USD 425 million in Ethereum, the second most popular form of cryptocurrency. And crypto firm Upexi saw its stock price soar more than 300 per cent after it announced plans to buy USD 100 million of Solana, a cryptocurrency popular in the meme coin ecosystem. (Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
India.com
an hour ago
- India.com
One statement by US President Trump and Elon Musk hits jackpot due to...
One statement by US President Trump and Elon Musk hits jackpot due to... New York: Amid the deteriorating relationship between the most powerful man and the richest man in the world over the 'One Big Beautiful Bill,' United States President Donald Trump said that he is not going to get rid of Elon Musk's companies — Tesla and Starlink. Following this positive statement shares of the electric vehicle manufacturing company Tesla skyrocketed by 5 percent. This development led to a jump of USD 13.9 billion in the wealth of the company's CEO Elon Musk. According to Bloomberg Billionaires Index, Musk's net worth has now reached USD 356 billion. However, his wealth has decreased by USD 76.2 billion this year. It is worth noting that Tesla is one of the world's leading electrical vehicle companies with a market cap of USD993.92 billion. It is ranked 11th in the list of top valuable companies in the world. Microsoft is the world's most valuable company with a value of USD3,513 trillion. It is followed by Nvidia (USD3.478 trillion), Apple (USD 3,045 trillion), Amazon (USD2.303 trillion) and Google's parent company Alphabet (USD2.114 trillion). Meta Platform, Saudi Aramco, Broadcom, TSMC and Berkshire Hathaway are included in list. Who Are In The Top 10 Recent ranking of the world's wealthiest people put Mark Zuckerberg in the second position with a net worth of USD245 billion. Jeff Bezos, Larry Ellison, Bill Gates, Steve Ballmer, Larry Page, Warren Buffett, Bernard Arnault, and Sergey Brin also mentioned in the top ten. Mukesh Ambani and Gautam Adani are ranked 17th and 20th in the richest persons list, with net worths of USD105 billion and USD84.8 billion.
