Rupee weakens slightly, broad dollar softness cushions pressure
The rupee closed at 86.2925 against the U.S. dollar, down about 0.2% on the day, after touching a near one-month low of 86.35 earlier in the session.
Asian currencies were flat-to-slightly higher, while the dollar index declined by nearly 0.2% to 98.2.
The Indian rupee and the Indonesian rupiah are among the few regional currencies nursing losses on the year so far, even as their peers, such as the Taiwan dollar and the Korean won, have climbed over 11% and 6%, respectively.
Muted portfolio flows, India's external investment deficit and likely FX reserve accumulation by the Reserve Bank of India are among the reasons cited by analysts for rupee's lacklustre performance this year.
On the day, price action appeared to indicate modest outflows but dollar-buying pressure eased in the latter half of the session, helping the rupee trim its losses, a trader at a private bank said.
India's benchmark equity indexes, the BSE Sensex (.BSESN), opens new tab and Nifty 50 (.NSEI), opens new tab, closed higher by about 0.5% each on the day, while the benchmark 10-year bond yield was last quoted slightly lower at 6.2986%.
In the near term, focus will be on developments on two fronts: how U.S. economic data impact expectations of rate cuts and news surrounding U.S.-India trade negotiations ahead of the August 1 deadline for higher U.S. tariffs to take effect.
"We maintain our view that slower growth, profit margin compression and export price reduction will contain the impact of tariffs, and that a slower economy will justify the Fed resuming rate cuts in September," ANZ said in a Monday note.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Reuters
18 minutes ago
- Reuters
India's Vinati Organics says accident at plant kills one
July 28 (Reuters) - India's Vinati Organics ( opens new tab said on Monday one of its employees died on Saturday at its plant in Maharashtra state in an accident during routine operations. The company does not foresee any material financial or operational impact due to the incident.
Reuters
18 minutes ago
- Reuters
Stocks surge, euro steady after US-EU trade agreement
SINGAPORE, July 28 (Reuters) - Global stocks rose and the euro appreciated on Monday after a tradeagreement between the United States and the EU lifted sentiment and provided some clarity in a week of key policy meetings by the Federal Reserve and the Bank of Japan. The U.S. struck a framework trade agreement with the European Union, imposing a 15% import tariff on most EU goods - half the threatened rate, a week after agreeing to a similar trade deal with Japan. Countries are scrambling to finalise trade deals ahead of an August 1 deadline set by U.S. President Donald Trump, with talks between the U.S. and China set for Monday in Stockholm amid expectations of another 90-day extension to the truce between the world's top two economies. "A 15% tariff on European goods, forced purchases of U.S. energy and military equipment and zero tariff retaliation by Europe, that's not negotiation, that's the art of the deal," said Prashant Newnaha, senior Asia-Pacific rates strategist at TD Securities. "A big win for the U.S." European futures surged more than 1%, while S&P 500 futures rose 0.5% and Nasdaq futures advanced 0.6%. The euro strengthened across the board, rising against the dollar, sterling and yen. "We have to be a bit cautious from here," said Sim Moh Siong, currency strategist at Bank of Singapore, of the broader risk-on rally. "A lot of good news is already in the price." MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS), opens new tab was up 0.32%, just shy of the almost four-year high it touched last week. Japan's Nikkei fell 1% after hitting a one-year high last week. While the baseline 15% tariff will still be seen by many in Europe as too high, compared with Europe's initial hopes to secure a zero-for-zero tariff deal, it is better than the threatened 30% rate. The U.S.-EU deal provides clarity to companies and averts a bigger trade war between the two allies that account for almost a third of global trade. "A major tail-risk has now been defused," said Marc Velan, head of investments at Lucerne Asset Management in Singapore. "Markets are interpreting this as a sign of stability and predictability returning to trade policy," he added. "The China delay fits the same pattern: the administration is opting for controlled diplomacy over confrontation." Gains for China's blue-chip stocks (.CSI300), opens new tab petered out towards the midday break, while Hong Kong's Hang Seng index (.HSI), opens new tab gained 0.5%. The Australian dollar , often seen as a proxy for risk appetite, was at $0.657, hovering around the near eight-month peak scaled last week. In an action-packed week, investors will watch out for the monetary policy meetings from the Fed and the BOJ as well as the monthly U.S. employment report and earnings from megacap companies Apple (AAPL.O), opens new tab, Microsoft (MSFT.O), opens new tab and Amazon (AMZN.O), opens new tab. While the Fed and the BOJ are expected to maintain rates, comments from the officials will be crucial for investors to gauge the interest rate path. The trade deal with Japan has opened the door for the BOJ to raise rates again this year. Meanwhile, the Fed is likely to be cautious on any rate cuts as officials seek more data to determine tariffs' impact on inflation before they ease rates further. But tensions between the White House and the central bank over monetary policy have increased, with Trump repeatedly lashing out at Fed Chair Jerome Powell for not cutting rates. Two of the Fed Board's Trump appointees have articulated reasons for supporting a rate cut this month. In commodities, oil prices rose after the U.S.-EU trade agreement. Brent crude futures and U.S. West Texas Intermediate crude both rose 0.5%. Gold prices fell on Monday to their lowest in nearly two weeks on reduced appetite for safe havens.
Reuters
an hour ago
- Reuters
Chinese AI firms form alliances to build domestic ecosystem amid US curbs
SHANGHAI, July 28 (Reuters) - China's artificial intelligence companies have announced two new industry alliances, aiming to develop a domestic ecosystem to reduce dependence on foreign tech as they seek to cope with U.S. export restrictions on advanced Nvidia (NVDA.O), opens new tab chipsets. The announcements were timed to coincide with the three-day World Artificial Intelligence Conference in Shanghai ending on Monday. The conference also showcased a slew of new products, such as an AI computing system from Huawei ( that experts believe rivals Nvidia's most advanced offering, as well as consumer-friendly products such as several kinds of digital AI glasses. The "Model-Chip Ecosystem Innovation Alliance" brings together Chinese developers of large language models (LLMs) and AI chip manufacturers. "This is an innovative ecosystem that connects the complete technology chain from chips to models to infrastructure," said Zhao Lidong, CEO of Enflame, one of the participating chipmakers. Other manufacturers of graphics processing units (GPUs) in the alliance include Huawei, Biren, and Moore Threads, which have been hit by U.S. sanctions that block them from purchasing advanced tech made with U.S. know-how. The alliance was announced by StepFun, an LLM developer. A second alliance, the Shanghai General Chamber of Commerce AI Committee, aims to "promote the deep integration of AI technology and industrial transformation." Participants include SenseTime ( opens new tab, also sanctioned by the U.S. and which has pivoted from facial recognition technology to LLMs. Others are StepFun and another LLM developer, MiniMax, as well as chipmakers Metax and Iluvatar CoreX. One of the most talked about products at the conference was Huawei's CloudMatrix 384 which incorporates 384 of its latest 910C chips and outperforms Nvidia's GB200 NVL72 on some metrics, according to U.S. research firm SemiAnalysis. Huawei's system design capabilities have meant that it has been able to use more chips and system-level innovations to compensate for weaker individual chip performance, SemiAnalysis said. At least six other Chinese computing firms showcased similar "clustering" chip technology. Metax demonstrated an AI supernode featuring 128 C550 chips designed to support large-scale liquid-cooled data centre requirements. Other events included Tencent's ( opens new tab unveiling of its open-source Hunyuan3D World Model 1.0, which the company said enables users to generate interactive 3D environments through text or image prompts. Baidu ( opens new tab announced what it said was next-generation "digital human" technology that helps businesses to create virtual livestreamers. It features "cloning technology" that can replicate a human's voice, tone, and body language from just 10 minutes of sample footage. Alibaba ( opens new tab was among those announcing AI glasses. Its Quark AI Glasses are powered by its Qwen AI model and are due to be released in China by the end of 2025. They will allow users to access the tech giant's map service for easy navigating and to use Alipay by scanning QR codes with voice commands.
