Indian 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 lackluster 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.
Pause in dollar rally offers relief to Indian rupee after 86 breach
India's benchmark equity indexes, the BSE Sensex and Nifty 50, 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
Business Recorder
an hour ago
- Business Recorder
India bonds drop to 11-week low as RBI commentary adds to bearish cues
MUMBAI: Indian government bonds fell on Friday, as hawkish commentary from India's central bank governor, coupled with higher U.S. Treasury yields and oil prices, curbed appetite for debt. The yield on the benchmark 10-year bond ended over 2 basis points higher at 6.3505%, the highest since May 9, compared with a previous close of 6.3276%. Bond yields move inversely to prices. Traders pared positions after the weekly debt auction, as a slew of negative cues soured sentiment. 'While the auction was subscribed fully, there is no further incentive for fresh buying as rising U.S. yields, oil prices anddeclining rupee are all negative for bonds,' said Debendra Kumar Dash, senior vice president of treasury at AU Small Finance Bank. The 10-year U.S. Treasury yield was at 4.4117% in Asian hours, up over 8 basis points from Tuesday's low of 4.33%. Meanwhile, oil prices rose 0.23% to $69.34 per barrel. The central bank governor's fireside chat at a Financial Express event also curbed expectations for rate easing, traders said, prompting those who were betting on an August cut to pare positions. India bonds end steady as lack of cues continue to dominate Malhotra said monetary policy, being forward-looking, will place greater focus on the outlook for growth and inflation, rather than their current levels, when the policy panel meets on August 6. With retail inflation falling to a six-year low and likely to hit a record low in July, calls for at least one more rate cut had ramped up. Malhotra added that the bar for further easing is higher than it would have been if the stance was accommodative, though the central bank still has the flexibility to move the rates up, down or pause. Rates India's overnight index swap rates rose due to high paying pressure as traders unwound earlier receiving positions. The one-year OIS rate ended 3 basis points higher at 5.53% and the two-year OIS rate rose nearly 5 bps to 5.51%. The liquid five-year OIS rate also rose 5 bps to 5.73%.
Business Recorder
an hour ago
- Business Recorder
Global LNG: Asian spot prices slip to ten-week low on tepid demand, rising supply
SINGAPORE: Asian spot liquefied natural gas (LNG) prices slipped for a second consecutive week to a ten-week low, weighed down by tepid demand and increasing supply from new projects. The average LNG price for September delivery into north-east Asia was at $11.90 per million British thermal units (mmBtu), industry sources estimated. This is down from $12.30/mmBtu last week and its lowest since May 16. 'Prices fell this week in part because of persistent weak Asian demand, with limited additional spot demand in northeastAsia during a heatwave because much of the additional cooling demand is being met by cheaper coal-fired generation,' said Martin Senior, head of LNG pricing at Argus. 'Also, increased renewables generation has pushed some coal-fired generation out of the baseload mix, allowing more available dispatchable capacity to meet peak demand.' Japan and South Korea have seen soaring temperatures during the summer months, incurring power generation demand for cooling needs. The prospect of supply growth in the coming months also weighed on prices, said Siamak Adibi, FGE's director for gas and LNG supply analytics, adding that supply from Canada will grow in the coming months after the LNG Canada project began production. Global LNG: Asian spot LNG prices inch up as hot weather boosts cooling demand 'This supply is to meet Asian demand directly,' Adibi said. He also noted Venture Global's Plaquemines export facility, which started its second phase production, has reached record output while the Greater Tortue Ahmeyim project offshore Mauritania and Senegal has had smooth operations since loading its first cargo. In Europe, S&P Global Commodity Insights assessed its daily North West Europe LNG Marker price benchmark for cargoes delivered in September on an ex-ship basis at $10.869/mmBtu on July 24, a $0.44/mmBtu discount to the September futures price at the Dutch TTF hub. Argus assessed the price at $10.92/mmBtu, while Spark Commodities assessed the August price at $10.723/mmBtu. 'A fall in spot Asian LNG demand over the past few weeks has allowed European buyers to bid at wider discounts to the TTF to secure cargoes,' said Argus' Senior. Meanwhile, Europe's gas storage season is progressing steadily, with storage levels currently around 65%, said Hans Van Cleef, head of energy research at EqoLibrium. 'The injection pace must remain strong to reach the minimum target of 80% before November 1,' he said. 'Since gas withdrawals from storage were higher this past winter compared to previous years, the storage refill task for this year is more substantial.' The U.S. arbitrage to north-east Asia via the Cape of Good Hope continues to incentivise U.S. cargo deliveries to Europe while the arbitrage via Panama is pointing to Asia, said Spark Commodities analyst Qasim Afghan. In LNG freight, Atlantic rates held steady at $33,750/day on Friday, while Pacific rates declined to $37,250/day, he added.
Business Recorder
an hour ago
- Business Recorder
Debt-plagued Maldives to host Modi, continuing to rebuild ties with lender
NEW DELHI/COLOMBO: Prime Minister Narendra Modi is expected to enhance India's development partnership with the Maldives in a two-day visit this week to the Indian Ocean archipelago, where India competes with China for influence. Modi, who landed in Male on Friday, is the first foreign leader to visit President Mohamed Muizzu after he took office in 2023 with a pledge to end the Maldives' 'India first' policy, and upgraded ties with China. Muizzu's moves briefly soured relations with New Delhi, before India helped to prevent the $7.5 billion economy from defaulting on its debt as the Maldives struggled to get tourists to its white-sand beaches and luxury resorts. He has since visited both countries, the Maldives' main bilateral lenders, to secure financial support, as well as signing trade pacts with China and Turkey and initiating talks with India on a trade agreement and an investment treaty. Indian Foreign Secretary Vikram Misri said steady diplomacy had helped to rebuild ties: 'There will always be events that will impact or try to intrude on the relationship. But I think this is testimony to the kind of attention that has been paid to the relationship, and including attention at the highest levels.' Former Maldives foreign minister Abdulla Shahid told Reuters that Modi's visit indicated Muizzu had 'decided to step back and correct the narrative'. India is expected to extend a line of credit worth $565 million to the Maldives, and talks on a Free Trade Agreement are expected to formally begin. Modi will also remotely inaugurate an expansion of the International Airport on the island of Hanimadhoo, which India is helping to finance, and attend Saturday's celebration of the Maldives' 60th anniversary of independence from Britain.
