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Deccan Herald
4 days ago
- Business
- Deccan Herald
A $73 billion short book is putting pressure on the Indian Rupee
By Subhadip SircarThe Indian rupee is emerging Asia's worst performer this quarter and may continue to lag peers as the central bank aims to avert a depletion in its foreign-exchange reserves, according to analysts. The Reserve Bank of India had dollar repayments of about $73 billion as of April as indicated by its net short forwards position, a measure of the amount of greenback it has agreed to sell at a future date, according to the central bank's latest data. It has narrowed from an all-time high of $88.8 billion in February. That may pile pressure on the RBI to buy dollars to prevent a drain on its reserves and lead to the rupee falling to 86.50 per dollar by end-December, according to IDFC First Bank Ltd. The currency is likely to weaken to 87.50 per dollar, according to estimates by Commerzbank AG. It was trading 0.2% higher at 85.40 on Monday after a government report on Friday showed the nation's economy grew stronger-than-expected 7.4% in the last quarter. The rupee is on track to 'underperform even as the dollar remains under pressure,' Barclays Bank Plc strategists including Mitul Kotecha wrote in a note. The RBI is expected 'to be focused on replenishing its FX buffers while allowing its forwards book to run off.'.Singapore remains India's largest FDI source for 7th straight RBI will likely avoid keeping a large book as it represents a large potential drain on reserves, said Gaura Sen Gupta, chief economist at IDFC First Bank. The rupee is little changed this quarter, missing out on a rally against the dollar that has lifted other emerging Asian currencies amid outflows from India's bond market. RBI Governor Sanjay Malhotra has been more flexible in allowing the currency to transition to a more market-determined trading regime. Reserves are expected to cushion volatility in the exchange rate and build resilience to the increasing reoccurrence of geopolitical and economic shocks, the central bank in a report last week. The RBI's short dollar book up to three months stood at about $15 billion in April while the three-month to one-year bucket was at $37.8 billion, according to central bank data. Those payments, if not rolled over, may lead to depleting foreign-exchange reserves stood at about $693 billion as of May 23, lower than the all-time high of $705 billion reached in September last year. Still, the authority has been less interventionist in recent months and may step in only at the extreme ends of the 84-87 range, said Vikas Jain, head of India fixed income, currencies and commodities trading at Bank of America. Traders will look forward to RBI's policy on June 6, where it's expected to cut interest rates by a quarter point, according to Commerzbank AG. This week's main economic events:Monday, June 2: Manufacturing PMI across Asia; Indonesia CPI, trade balance; Japan capital spendingTuesday, June 3: Australia current account; Caixin China manufacturing PMI; RBA minutesWednesday, June 4: South Korea CPI; Japan, India services, composite PMI; Australia GDPThursday, June 5: South Korea GDP, reserves and current account; CPI data for Philippines, Taiwan and Thailand; Australia trade balanceFriday, June 6: RBI rate decision; Thailand, India, Philippines to report FX reserves
Time of India
4 days ago
- Business
- Time of India
An $84 billion short book is putting pressure on India's rupee
The Indian rupee is emerging Asia's worst performer this quarter and may continue to lag peers as the central bank aims to avert a depletion in its foreign-exchange reserves , according to analysts. The Reserve Bank of India had dollar repayments near a record high of $84.3 billion as of March as indicated by its net short forwards position, a measure of the amount of greenback it has agreed to sell at a future date. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Đây là Chi phí Cấy ghép Nha khoa Toàn bộ Miệng Cấy ghép răng | Quảng cáo tìm kiếm Tìm hiểu thêm That may pile pressure on the RBI to buy dollars to prevent a drain on its reserves and lead to the rupee falling to 86.50 per dollar by end-December, according to IDFC First Bank Ltd . The currency is likely to weaken to 87.50 per dollar from 85.5813 on Friday, according to estimates by Commerzbank AG. The rupee is on track to 'underperform even as the dollar remains under pressure,' Barclays Bank Plc strategists including Mitul Kotecha wrote in a note. The RBI is expected 'to be focused on replenishing its FX buffers while allowing its forwards book to run off.' Bloomberg Live Events The RBI will likely avoid keeping a large book as it represents a large potential drain on reserves, said Gaura Sen Gupta, chief economist at IDFC First Bank. The rupee has fallen 0.1% this quarter, missing out on a rally against the dollar that has lifted other emerging Asian currencies amid outflows from India's bond market. RBI Governor Sanjay Malhotra has been more flexible in allowing the currency to transition to a more market-determined trading regime. Reserves are expected to cushion volatility in the exchange rate and build resilience to the increasing reoccurrence of geopolitical and economic shocks, the central bank in a report last week. The RBI's short dollar book up to three months stood at about $24 billion while the three-month to one-year bucket was at $40 billion, according to central bank data. Those payments, if not rolled over, may lead to depleting reserves. India's foreign-exchange reserves stood at about $693 billion as of May 23, lower than the all-time high of $705 billion reached in September last year. Still, the uthority has been less interventionist in recent months and may step in only at the extreme ends of the 84-87 range, said Vikas Jain, head of India fixed income, currencies and commodities trading at Bank of America. Traders will look forward to RBI's policy on June 6, where it's expected to cut interest rates by a quarter point, according to Commerzbank AG.
Business Recorder
26-05-2025
- Business
- Business Recorder
Asian currencies rise as US fiscal woes, policy shifts weigh on dollar
Emerging Asian currencies firmed on Monday, aided by pressure on the dollar amid US fiscal concerns, while risk appetite improved after US President Donald Trump postponed his threat to impose 50% tariffs on EU goods by more than a month. The MSCI index of emerging market currencies rose as much as 0.4% to its all-time high. The Malaysian ringgit and the Taiwanese dollar jumped 0.6% and 0.5%, respectively, to their highest levels in three weeks, and the Singapore dollar reached an eight-month high. The three currency units have gained between 1.9% and 6.6% this month. 'The dollar selling seems to be fairly broad-based. Fiscal concerns have clearly been something that have weighed on the dollar and led to some reassessment, which in turn has fuelled the rally in Asian currencies,' said Mitul Kotecha, head of Asia FX and emerging markets macro strategy at Barclays. Moody's downgrade of the US credit rating earlier this month and the passing of a sweeping tax and spending bill by the Republican-controlled House of Representatives last week have raised concerns about the fiscal health of the world's largest economy. Moreover, Trump backed away on Sunday from his threat to slap 50% tariffs on imports from the European Union next month, agreeing to extend the deadline until July 9. Even as the rapid de-escalation calmed worries about a global downturn, it served as a reminder of how quickly and suddenly US trade policy can turn. China's yuan strengthened to trade near a seven-month high against the dollar. Asian emerging currencies extend gains The Indonesian rupiah rose as much as 0.3% to a five-month high, while the South Korean won climbed as much as 0.4% to its highest level since October 2024. The won has risen more than 4% this month against the backdrop of broader dollar selloff. Meanwhile, officials also said that currency policy was discussed at a meeting they had in Milan with US officials earlier this month. Investor focus is now on the Bank of Korea's policy meeting on Thursday, with analysts saying the stronger won may give the central bank more confidence to cut rates. Among stock markets, Seoul shares jumped 1.3%, while equities in Jakarta, Singapore and Kuala Lumpur slipped between 0.2% and 1%.
New Straits Times
26-05-2025
- Business
- New Straits Times
Asian currencies rise as US fiscal woes, policy shifts weigh on dollar
KUALA LUMPUR: Emerging Asian currencies firmed on Monday, aided by pressure on the dollar amid US fiscal concerns, while risk appetite improved after US President Donald Trump postponed his threat to impose 50 per cent tariffs on EU goods by more than a month. The MSCI index of emerging market currencies rose as much as 0.4 per cent to its all-time high. The Malaysian ringgit and the Taiwanese dollar jumped 0.6 per cent and 0.5 per cent, respectively, to their highest levels in three weeks, and the Singapore dollar reached an eight-month high. The three currency units have gained between 1.9 per cent and 6.6 per cent this month. "The dollar selling seems to be fairly broad-based. Fiscal concerns have clearly been something that have weighed on the dollar and led to some reassessment, which in turn has fuelled the rally in Asian currencies," said Mitul Kotecha, head of Asia FX and emerging markets macro strategy at Barclays. Moody's downgrade of the US credit rating earlier this month and the passing of a sweeping tax and spending bill by the Republican-controlled House of Representatives last week have raised concerns about the fiscal health of the world's largest economy. Moreover, Trump backed away on Sunday from his threat to slap 50 per cent tariffs on imports from the European Union next month, agreeing to extend the deadline until July 9. Even as the rapid de-escalation calmed worries about a global downturn, it served as a reminder of how quickly and suddenly US trade policy can turn. China's yuan strengthened to trade near a seven-month high against the dollar. The Indonesian rupiah rose as much as 0.3 per cent to a five-month high, while the South Korean won climbed as much as 0.4 per cent to its highest level since October 2024. The won has risen more than 4 per cent this month against the backdrop of broader dollar selloff. Meanwhile, officials also said that currency policy was discussed at a meeting they had in Milan with US officials earlier this month. Investor focus is now on the Bank of Korea's policy meeting on Thursday, with analysts saying the stronger won may give the central bank more confidence to cut rates. Among stock markets, Seoul shares jumped 1.3 per cent, while equities in Jakarta, Singapore and Kuala Lumpur slipped between 0.2 per cent and 1 per cent.
CNBC
22-05-2025
- Business
- CNBC
Recent data suggest continued strong demand for US Treasuries: Barclays
Mitul Kotecha of Barclays discusses the bond selloff in the U.S. but says foreign appetite still appears intact. He also talks about the rise in Japanese bond yields, adding that the magnitude has not reached a significant stage yet.
