Forex Market Insights

Forex Market Insights

Trade Promotion Council of India has associated with Myforexeye Insights to bring a weekly newsletter on forex market insights for Indian exporters. The newsletter will regularly track the movement of the Indian rupee vis-a-vis other currencies and give you a sense of possible movements and market sentiments in the upcoming week.

The newsletter is aimed at providing businesses with vital inputs on currency market trends that can enable them to make more informed business decisions.

Forex Market Insights September 24-30
The rupee tumbled to a low of 80.86 against a US$ on Thursday as compared to its previous day's close at 79.98. This is the biggest single-day slump in 7 months followed by an all-time low of 81.23 in Friday's session. The aggressive rate hike by the Fed may force the RBI to go for a sharp increase in the repo rate. The RBI Monetary Policy meeting is scheduled during Sep 28-30, where it is widely expected to hike the key rate by 35 to 50 bps at the end of this month.
Forex Market Insights September 19-23
US stocks ended the week in the red, falling to two-month lows as warning of an upcoming global slowdown quickened the investor’s flight to safety at the conclusion of a turbulent week. Due to the economic pressure across the board along with Fed meeting next week where central bank is widely expected to raise rates by 75 bps. Some traders are betting on a 100 bps increase. The Indian government has amended the Foreign Trade Policy to allow international trade invoicing, payment and settlement in the Indian rupee, activating the mechanism announced by the Reserve Bank of India to facilitate trade in the domestic currency.
Forex Market Insights Newsletter September 12-16, 2022
US benchmark 2-year treasury yields shot up to a 14-year high of 3.57%. Long-term yield stayed at 3.32%, below the 11-year high of 3.498% as market participants accepted the view that more interest rate hikes are required from the US Fed. DXY index didn’t show much reaction to comments made by the Fed president], settling at 109.00 by the end of the week. US$/INR remains in a range bound trade between 79.00 to 80.00 levels since last month. The last lot of Fed speeches starts from this weekend and will be important to watch for clear directions.
Forex Market Insights September 5-9
DXY index rallied to a fresh 20-year high last week at 109.99 impacted by US data, which left the DXY on track for a 0.5% weekly gain; even as it tried to recover from a knee-jerk sell-off and settled at 109.46 by the end of the week. On the domestic front, last week was a highly volatile week for the US$/INR pair. Data from the IMF indicating that India overtook the UK to become the world’s 5th largest economy provided a big boost in confidence.
Forex Market Insights September 29-August 2
Last week was a critical week for Euro as, it became worth less than a US dollar. EUR/US$ pair tumbled to new 20-year lows near US$ 0.99 in a visible sign of the challenges facing the zone, not least an energy crisis hitting the euro zone harder than elsewhere, although the pair recovered after the Jackson hole symposium which happened on Friday. Coming to India, the RBI is likely to intervene at key levels of 79.90, thus providing an opportunity to buy the pair on dips. But it remains a speculation whether the RBI will continue to intervene in the market for long...
Forex Market Insights, August 21-27, 2022
Russia held onto its spot as China's top oil supplier for a third consecutive month in July, with China increasing purchases of cheap supplies, while cutting shipments from rival suppliers such as Angola and Brazil. China's coal imports from Russia jumped 14% in July from a year earlier to their highest level in at least five years. Jackson Hole Symposium will be closely watched in the markets in the coming week in light of concerns on over tightening monetary policy amidst numerous challenges. The rupee depreciated from a three-week high as it took offers to refresh intraday low near 79.70 during the initial Asian session. Indian rupee bets on softer oil prices and the latest positive signals from the RBI. In the coming week we have no major data scheduled, which in turn directs risk catalysts for fresh impulse.
Forex Market Insights Newsletter August 14-20, 2022
A memorable week – dollar index surged to its highest levels since Nov ’02, sending major currencies to multi-year bottoms. Euro plunged to an abyss not seen after Dec’02, very close to the much talked about ‘parity to dollar’. Global focus is gradually shifting towards fear of recession from the earlier worries of high inflation. Even though global commodity prices have cooled off significantly from their peaks, energy prices (oil and gas) continue to remain high. It's going to be a tough tight rope walk for global Central Bank policy makers.
Forex Market Insights August 7-13, 2022
Taming rigid, multi-decade high inflation continued to be the focus of Central Banks around the world. After Fed and ECB, RBI and Bank of England increased their benchmark interest rates by 50 bps last week. Despite the IMF revising global growth projections downwards and rising risks of recession, RBI retained GDP growth projection for 2022-23 at 7.2%. Geo-political worries (increased uncertainties around US-China confrontation on Taiwan) will keep financial markets nervous and boost demand for safe haven assets.
Forex Market Insights Newsletter July 31-August 6, 2022
Just when market participants thought that the Indian Rupee will only weaken, the Indian unit opened stronger on Friday and closed the week at 79.25, a significant gain over the previous day’s close of 79.75. The domestic currency was supported by general dollar weakness and hawkish comments from the IMF. On the global front US Fed hiked the key policy rates by 75 bps, as expected, to 2.25%-2.50% and there are expectations of a further 75 bps rate hike in September.
Forex Market Insights July 24-30, 2022
US$/INR hovered around the top psychological 80 mark last week, as the former moderated Thursday’s losses. Rupee depreciation resulted in trade deficit hitting record levels in the past two months, driven by the highest monthly import bill of more than US$ 60 billion. Imports value shot up primarily due to increased global energy prices and a slipping rupee, which can further broaden the current account gap.
Forex Market Insights Newsletter, July 17-23, 2022
The Indian Rupee touched an all-time low of 79.95 in Friday’s Indian trading Session during a dollar bull rally ahead of firmer oil prices, higher US inflation rate  coupled with recession fears. Call buyers have an upper hand when compared to the bear traders in the current scenario. On the global front, the DXY remained firm around 108.60 after regaining a two-decade high of 109.28 in the previous week.
Forex Market Insights - July 10-16, 2022
A memorable week – dollar index surged to its highest levels since Nov ’02, sending major currencies to multi-year bottoms. Euro plunged to an abyss not seen after Dec’02, very close to the much talked about ‘parity to dollar’. Global focus is gradually shifting towards fear of recession from the earlier worries of high inflation. Even though global commodity prices have cooled off significantly from their peaks, energy prices (oil and gas) continue to remain high. It's going to be a tough tightrope walk for global Central Bank policy makers – control sky high inflation or encourage economic growth.
Forex Market Insights, July 3-9, 2022
All-time record depreciation of the Indian Rupee at 79.13 and increasing interest rates could hit domestic corporates that relied on on overseas loans riding low-interest rates, as rating companies begin to relook at them. Companies with major business revenues generated in rupees will be more vulnerable to a downgrade. Indian rupee pair’s recent gains could be linked to firmer oil prices at around US$ 110. Due to heavy dependence on energy imports domestically, strong oil prices pressurized the rupee amid a record budget deficit.
Forex Market Insights Newsletter June 25 to July 2
The interest rate differential has been shrunk between the dollar and the Rupee. The US central bank has hiked the Fed interest rate by 175 bps till date, while the RBI has raised it by only 90 bps, thus resulting in an 8-year low of annualized premiums of Indian rupee; which is 2.5% now compared to the previous of 4%. Brent has been continuously trading above $105 per barrel, despite falling from a high of $125 in the near term; wherein our domestic imports consist of 83% of oil, resulting in an increase in CAD.
Forex Market Insights Newsletter June 19-25, 2022
The EUR/US$ continued its slide after falling below 1.0500 and breached a fresh intraday low of 1.0450. Followed by the continued dollar strength, the EUR/US$ looks to end the second straight week in the red. Meanwhile, the Swiss National Bank's shocking 50 basis point rate hike provided strength to the CHF against the dollar and US$/CHF ended last week at the 0.9697 level. Further to a two-day slide, the US Dollar Index, which tracks the dollar's strength against a basket of six major currencies, turned its direction and ignored its weekly losses. The DXY rose more than 1% on the day at 105.00.
Forex Market Insights Newsletter June 12-18, 2022
The US$ index (DXY) was trading in an unusual manner on Friday followed by Thursday’s heavy volatility to the area beyond the 103.00 levels. Extreme sell-off in the ‘risk complex’ added extra pressure after the ECB did not sound as hawkish as expected at its event on Thursday, leading to added pressure, while pushing the index to fresh multi-week highs past the 103.00 yardstick. In the US$ session on Friday, treasury yields and the long end of the curve appear to be smoothening compared to a continuing uptrend in the short end.
Forex Market Insights June 5-11, 2022
Non-farm payroll growth breached the forecast for last month in the US, with employers adding 390,000 jobs. Unemployment rate remain steady at 3.6%, but labor force growth inched higher and wages rose only modestly. The Indian rupee continued to trade in a narrow band in spite of marginal gains in global and domestic equities. Volatility remained low for the entire week. Trends indicate a strong possibility for rupee recovery.
Forex Market Insights Newsletter May 29-June 4
The Indian rupee inched slightly higher to close at 77.59 at the end of the week, taking cues from positive domestic equities and dollar weakness across global markets. It hovered in a narrow range with pressure from elevated crude oil prices, fiscal deficit concerns and persistent NSE. Dollar regained after US preliminary GDP number came in below estimates...
Forex Market Insights Newsletter; May 22-28, 2022
The US$/INR hit an all-time low intraday level of 77.79 last week, wherein RBI was said to have been selling dollars near the 77.70 level after the rupee began the day on a historical opening low. Indian equity ended the volatile week on a positive note, rallying up to 3% and logging their biggest intraday gains in more than three months...
Forex Market Insights May 15-21, 2022
The dollar index sky rocketed to a 20-year peak, sending international major currencies and Asian currencies plunging into multi-year bottoms. US inflation continues to trend higher and the Fed reiterates their stand on taking remedial actions, indicating more hikes. Inflation was higher in China and India as well and this could complicate matters for policy makers in the growth vs inflation debate. With crude prices persisting at elevated levels and the Russia-Ukraine war showing no signs of cooling off, inflationary pressures could dominate 2022. No wonder there is a massive flight to risk aversion...
Forex Market Insights May 8-14, 2022
An eventful week for the financial markets, which kept market participants at the edge of their seats. A scheduled rate hike from Fed and BoE to an unscheduled one from RBI ensured enough volatility in the system. Fed’s tightening policy would continue on track after the non-farm payrolls number expands in April. Emerging market currencies closed in red, but hopes of dollar inflows for LIC IPO took the Rupee a tad below 76...
Forex Market Insights May 2-8, 2022
The Chinese Yuan directed Asian currencies this week after weakening to 6.65 against the US dollar, with oil rising amid Moscow cutting off gas supplies to Poland and Bulgaria. As Yen and Euro hit 20-year and 5-year lows respectively, the dollar is flying high on hopes of a 0.5% rate hike at the May 4 Fed meeting, as the interest rate gap increases between these economies. Recessionary fears loom as US economy contracted first time in 2 years...
Forex Market Insights Newsletter April 24-30
Inflation has prompted IMF to lower the economic growth forecast for the globe by nearly a full percentage point. If Western countries expand their sanctions against Russia, a 2-month long war could prompt a further increase in inflation. US treasury yields have rocketed, causing capital outflows from Asian economies (read China & India) on aggressive rate hike expectations from US and Europe. Markets are eagerly awaiting for the Fed's next rate action in May as well as the RBI's expected response...
Forex Market Insights Newsletter April 18-23
IMF has lowered the global growth forecast due to worsening supply bottlenecks (read Chinese lockdowns) and higher inflation caused by Ukraine crisis as Russian President Vladimir Putin warns of Western countries phasing out Russian gas imports. Single currency slid towards a two year low against the dollar after a dovish ECB policy, increasing the interest rate gap between US/UK and Eurozone. In a short week for the Indian markets, the Rupee closed the week at a low after local inflation rose beyond central bank’s tolerance level.
Forex Market Insights Newsletter April 11-17
US FOMC meeting minutes strongly indicated a 50bps rate hike as early as May while reducing the Fed’s balance sheet by $95bn monthly; leading the US yield curve to steepen after having inverted recently. After a heightened expectation of more than 2% additional Fed funds rate hikes in 2022, the dollar reached for the skies as most global currencies weakened. The rupee took cue from the central bank’s monetary policy meeting where key interest rates were left unchanged...
Forex Market Insights Newsletter, April 4-10, 2022
Interest rate hikes are here with expectations of further increases in months to come. Most US Federal Reserve members have been bullish with favourable economic data. As Ukraine-Russia peace talks seem to make headway, financial markets are taking a breather. Volatile oil prices have kept demand in control, though US President wants to release strategic oil reserves to combat inflation. The much awaited LIC IPO didn’t see the light of the day in March but fingers are crossed as the DRHP deadline - May first week comes closer...
Forex Market Insights Newsletter, March 27-April 1, 2022
Crude oil prices ruled the market trends this week, taking other metal commodities along. Apart from G7 tackling the Ukraine-Russia war situation, few FOMC members reiterated Federal Reserve Governor Jerome Powell’s prognosis of higher interest rates in 2022, especially during the next May meeting. The better than expected initial jobless claims from US ensured that the dollar retained its shine and it sharply rose against its counterpart – Japanese Yen, taken as a safe-haven till now.
Forex Market Insights March 20-26, 2022
Global central banks have clearly indicated that they are concerned about economies going into stagflation, with US and UK hiking their cost of borrowings. The ongoing Russia-Ukraine war has kept the stance dovish for the short term due to high energy prices. Japan has retained the stimulus, though post-April, they seek to raise rates too. Equities around the world ended the week on a positive, though Indian investors are keeping an eye on the LIC IPO dates. Retail inflation in India is still above the RBI’s tolerance ceiling. Is RBI under pressure to also follow the rest as India sees about US$ 5 billion outflow in first 2 weeks of March?  
Forex Market Insights - 13-19 March, 2022
The fact that US inflation is at a 40-year high, is expected to propel a rate hike by the Fed this week. Market speculations expect a rate hike of around 25bps, but the Fed Chair is known to surprise financial markets again and again. The European Central Bank has already started talking hawkishly compared to their last meeting. The Bank of England has raised rates twice and is due to meet the coming week. Meanwhile, even as the rupee continues to face immense volatility, the LIC IPO is much awaited by Rupee bulls, as it could propel a return to Indian equities...

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