Rupee nearly flat alongside subdued Asia FX; RBI policy decision awaited
MUMBAI, June 6 (Reuters) - The Indian rupee was nearly flat in early trading on Friday, tracking muted moves in regional currencies as traders awaited the Reserve Bank of India's monetary policy decision.
The rupee was at 85.80 as of 09:20 a.m. IST, little changed from its close at 85.79 in the previous session.
The RBI's policy decision is due at 10:00 a.m. IST, and the central bank is widely expected to cut rates by 25 basis points (bps) as muted inflation provides ample space to focus on boosting economic growth further.
Asian currencies were mostly rangebound on the day, while the dollar index nudged higher to 98.8.
Markets showed a muted reaction after U.S. President Donald Trump and Chinese leader Xi Jinping held a much anticipated call while leaving key issues unresolved for future talks. The offshore Chinese yuan was a tad lower at 7.1790.
The rupee is expected to hover in the 85.75-86.20 range with a weakening bias in the near-term, FX advisory firm IFA Global said in a note.
Dollar-rupee forward premiums, meanwhile, were steady in the run up to the RBI's policy announcement, with the 1-year implied yield at 1.91%.
The announcement of fresh measures to inject rupee liquidity into the banking system or dovish commentary from the central bank could push forward premiums lower, a trader at a Mumbai-based bank said.
The trader expects the 1-year implied yield to find support at 1.85% in the near term.
India's benchmark 10-year bond yield was little changed at 6.1985% while the benchmark equity index, the Nifty 50 (.NSEI), opens new tab, was nearly flat as well on Friday.
Later in the day, the focus will be on the release of U.S. non-farm payrolls data, which will offer cues on how trade uncertainty is impacting the U.S. economy and affecting the outlook for rate cuts by the Federal Reserve.
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The Independent
31 minutes ago
- The Independent
Big changes are being proposed for a US food aid program. Here's a breakdown by the numbers
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The program provides monthly payments for food purchases to low-income residents generally earning less than $1,632 monthly for individuals, or $3,380 monthly for a household of four. The nation's first experiment with food stamps began in 1939. But the modern version of the program dates to 1979, when a change in federal law took effect eliminating a requirement that participants purchase food stamps. There currently is no cost to people participating in the program. Number: 42 million A little over 42 million people nationwide received SNAP benefits in February, the latest month for which figures are available. That's roughly one out of every eight people in the county. Participation is down from a peak average of 47.6 million people during the 2013 federal fiscal year. Often, more than one person in a household is eligible for food aid. As of February, nearly 22.5 million households were enrolled SNAP, receiving an average monthly household benefit of $353. Dollars: $295 billion Legislation passed by the House is projected to cut about $295 billion of federal spending from SNAP over the next 10 years, according to the Congressional Budget Office. A little more than half of those federal savings would come by shifting costs to states, which administer SNAP. Nearly one-third of those savings would come by expanding a work requirement for some SNAP participants, which the CBO assumes would force some people off the rolls. Additional money would be saved by eliminating SNAP benefits for between 120,000 and 250,000 immigrants legally in the U.S. who are not citizens or lawful permanent residents. Another provision in the legislation would cap the annual inflationary growth in food benefits. As a result, the CBO estimates that the average monthly food benefit would be about $15 lower than it otherwise would have been by 2034. Ages: 7 and 55-64 To receive SNAP benefits, current law says adults ages 18 through 54 who are physically and mentally able and don't have dependents would need to work, volunteer or participate in training programs for at least 80 hours a month. Those who don't do so are limited to just three months of benefits in a three-year period. The legislation that passed the House would expand work requirements to those ages 55 through 64. It also would extend work requirements to some parents without children younger than age 7. And it would limit the ability of states to waive work requirements in areas that lack sufficient jobs. The combined effect of those changes is projected by the CBO to reduce SNAP participation by a monthly average of 3.2 million people. Percentages: 5%-25% The federal government currently splits the administrative costs of SNAP with states but covers the full cost of food benefits. Under the legislation, states would have to cover three-fourths of the administrative costs. States also would have to pay a portion of the food benefits starting with the 2028 fiscal year. All states would be required to pay at least 5% of the food aid benefits, and could pay more depending on how often they make mistakes with people's payments. States that had payment error rates between 6-8% in the most recent federal fiscal year for which data is available would have to cover 15% of the food costs. States with error rates between 8-10% would have to cover 20% of the food benefits, and those with error rates greater than 10% would have to cover 25% of the food costs. Many states could get hit with higher costs. The national error rate stood at 11.7% in the 2023 fiscal year, and just three states — Idaho, South Dakota and Vermont — had error rates below 5%. But the 2023 figures are unlikely to serve as the base year, so the exact costs to states remains unclear. 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Reuters
39 minutes ago
- Reuters
AMERICAS U.S.-China framework underwhelms
LONDON, June 11 (Reuters) - What matters in U.S. and global markets today I'm excited to announce that I'm now part of Reuters Open Interest (ROI), opens new tab, an essential new source for data-driven, expert commentary on market and economic trends. You can find ROI on the Reuters website, opens new tab, and you can follow us on LinkedIn, opens new tab and X., opens new tab After all the hype, this week's trade talks between the United States and China turned into something of a damp squib, producing a 'framework' for progress and little in the way of concrete details. Investor attention will now quickly switch to today's U.S. consumer price inflation report and two big auctions of long-term Treasury debt, including $39 billion of 10-year Treasury notes. I'll discuss this and the rest of today's market news below. Plus, today's column explains why Italy's surprising bond market revival challenges its reputation as a debt outlier and what this means for the rest of the G7. Today's Market Minute * U.S. and Chinese officials said on Tuesday they had agreed on a framework to get their trade truce back on track and remove China's export restrictions on rare earths, while offering little sign of a durable resolution to longstanding trade tensions. * Billionaire businessman Elon Musk said on Wednesday he regretted some of the posts he made last week about U.S. President Donald Trump as they had gone "too far". * Several U.S. cities braced for protests on Wednesday against Trump's sweeping immigration raids, as parts of the country's second largest city Los Angeles spent the night under curfew in an effort to quell five days of unrest. * Beijing's restrictions on rare earth exports have exposed the West's dependency on Chinese supplies of these esoteric metals and the magnets they help power. 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There are currently few details available about the discussions between Washington and Beijing. U.S. Commerce Secretary Howard Lutnick said the framework puts "meat on the bones" of a stalled agreement in Geneva last month, with the aim of removing restrictions on Chinese exports of rare earths and magnets and some of the recent U.S. export restrictions "in a balanced way". But there was no additional information about the sky-high bilateral tariffs imposed - and paused - in recent months. Whatever agreements the two parties came to will now go back to their respective presidents for approval. In the background, JPMorgan lifted its end-of-year forecast for China's onshore yuan , citing moderating risks around the trade war and a global theme of so-called de-dollarization. The U.S. investment bank revised its dollar/yuan target to 7.15 from 7.30, seeing a "gentle downtrend" to 7.10 by mid-2026. There was better news on the trade front back in the Americas. The United States and Mexico are negotiating a deal to reduce or eliminate Trump's 50% steel tariffs on imports up to a certain volume, industry sources said late Tuesday. That appeared to underscore the rise in Mexico's peso this week to its best level since August last year. Meanwhile, MCSI's all-country stock index (.MIWD00000PUS), opens new tab managed to eke out another small gain to hit a new record high, which is impressive given the latest world economic forecasts. The World Bank slashed its global growth forecast for 2025 by 0.4 percentage point to 2.3%, saying that higher tariffs and heightened uncertainty posed a "significant headwind". In its twice-yearly Global Economic Prospects report, the bank lowered its forecasts for nearly 70% of all economies, including the United States, China and Europe, as well as six emerging market regions. While the World Bank stopped short of forecasting a recession, it said growth this year would be the weakest outside of a recession since 2008. It forecast that GDP growth would average just 2.5% by 2027, the slowest pace in any decade since the 1960s. Speaking in Beijing, European Central Bank President Christine Lagarde said coercive trade policies will fail to resolve financial imbalances and that the risk of mutual damage is so great that all sides must weigh policy adjustments to resolve the tensions. Nevertheless, over in the UK, the blue chip FTSE100 (.FTSE), opens new tab rose to within a whisker of record highs set in March as investors awaited UK finance minister Rachael Reeves' latest government spending review on Wednesday. Reeves will allocate more than 2 trillion pounds ($2.7 trillion) of public spending to different departments, outlining the government's priorities for the coming year. 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Make sure to check out today's column, which looks at the remarkable drop in Italy's bond market risk premium versus Germany's. Chart of the day China holds a near monopoly on rare earth magnets, a crucial component in electric vehicle motors, and its decision in April to suspend exports of a wide range of critical minerals and magnets upended global supply chains. In May, Washington responded by halting shipments of semiconductor design software and chemicals and aviation equipment, revoking export licences that had been previously issued. Two days of talks in London between the two biggest economies attempted to break this logjam. Today's events to watch * U.S. May consumer price report (8:30 AM EDT), US May Federal budget (2:00 PM EDT) * UK finance minister Rachel Reeves to announce multi-year spending plan * U.S. Treasury auctions $39 billion of 10-year notes * U.S. corporate earnings: Oracle * European Central Bank board member Piero Cipollone and Irish central bank chief Gabriel Makhlouf speak Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, opens new tab, is committed to integrity, independence, and freedom from bias.
Reuters
39 minutes ago
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Tariffs could be the spur Europe's single market needs
BRUSSELS, June 11 (Reuters) - To bring electronic scrap and other waste from across the European Union to its Belgian recycling plant, materials group Umicore ( opens new tab can spend at least a month tackling a complex array of national shipment rules. The problem is not just Umicore's as businesses across Europe grapple with internal obstacles that can be as damaging as tariffs. Analysts, however, say U.S. President Donald Trump's tariffs have provided the necessary push to make the bloc the single market it aspires to be. Umicore's difficulties are particularly significant in that the company recycles 17 of the 34 minerals identified by the EU as critical for its green and digital transition. Chief Executive Bart Sap says a shipment may need to go by rail in one country, then transfer to a boat in another with a wealth of diverse documentation along the route. "With that ununified waste market, the internal hurdles are so high that actually 73% of waste is being exported," he told Reuters in an interview. Diverging waste shipment regulation is one of the many internal barriers that add cost and complexity to doing business within the EU. The International Monetary Fund has estimated EU internal barriers are the equivalent of tariffs of 44% for goods and 110% for services, well above the U.S. tariffs of 25% on steel and cars and 10% on many other goods. A similar study in 2021 concluded barriers for goods flow within the United States amounted to a 13% tariff. For goods, EU barriers include restrictions on retailers' ability to source products or sell them in other EU countries and a jumble of rules on labelling. AkzoNobel ( opens new tab, Europe's largest paint maker, complains it cannot just sell the same tub across the 27-nation bloc, placing the blame not on different languages but varying rules. These include separate recycling logos in France and Spain and some EU countries requiring air quality information. The Dutch company says it cannot fit all the necessary information on smaller tubs, and that frequent rule changes force it to keep investing on packaging updates. QR codes could be a solution, it says, something the European Union will start requiring from 2027. For services, the single market is even less developed. Laws on setting up foreign subsidiaries diverge, declarations for posting workers abroad vary and 5,700 professions are regulated across the bloc, meaning doctors, nurses, engineers or accountants in one EU country cannot easily work in another. The barriers do not just add cost and complexity. They stifle growth. Former Italian Prime Minister Enrico Letta, who produced an influential report on the EU single market last year, said EU companies suffered a "stunning size deficit" relative to rivals and that market divisions prevented them building scale. A core problem is vested interest in sectors protecting regulated professions from competition, and as national supervisors prove resistant to an EU-wide capital market that could rival U.S. investments in newer companies and infrastructure. "These are low-hanging fruit economically, because basically they're free. It's essentially changing regulation. But that doesn't mean they're necessarily politically easy," said Niclas Poitiers, research fellow at think tank Bruegel. Debate on a unified capital market has dragged on for more than a decade as EU members have squabbled over issues such as supervision and insolvency rules. However, a deeper single market has gone from a nice to have to a must have as the impact of Trump's tariffs on exports has highlighted the need to remove obstacles to compete with global rivals. The Commission says it is prioritising removing what it calls the "terrible ten" most harmful single market barriers, including recognition of professional qualifications and fragmented rules on labelling and waste. Letta, dean of IE university in Spain and president of the Jacques Delors Institute think tank, said he was encouraged by Commission initiatives to tackle the most critical unfulfilled parts of the single market - services and capital. They include promotion of a savings and investment union and removing barriers to business in services, Multiple legislative proposals are due in 2025 and 2026. Aslak Berg, research fellow at the Centre for European Reform think tank, said the Commission seemed to be serious about reforms that made a difference, but needed to get EU members on board. Letta said there were though two grounds for optimism. Firstly, EU capitals were aware of the need for change. "The other key point that makes me optimistic is the fact that we have a fantastic friend on the other side of the of ocean, because the acceleration that is taking place is all because of Trump," he said. Letta said the EU needed to push through EU-wide laws called regulations, rather than directives that allow EU members to set their own course on common goals. He also urged the EU to be energised not paralysed by Trump. The EU took a pause after driving through movement of goods and people and its new currency in the late 1980s and 1990s, but then got sidelined by a series of crises, from the sovereign debt crisis, Brexit, COVID-19 and the energy crisis. "The European Union usually is able to focus to one crisis at a time, and today we are all focused on tariffs. That is a problem. Because in reality, my guess is the completion of the single market is more important than all the rest." ($1 = 0.8777 euros)
