August 23, 2024
New Delhi, India
Currency Market Analysis
USDINR
The rupee traded within a range of 83.78 to 84.04, dropping due to strong dollar demand from importers and foreign banks, which erased most of the rupee’s earlier gains. Meanwhile, Federal Reserve officials discussed the possibility of reducing interest rates but chose to hold off. The Reserve Bank of India (RBI) emphasized the need for inflation to stabilize around its 4% target on a sustainable basis.
EURINR
The euro traded in a range of 92.65 to 94.05, gaining strength on the back of expectations that the European Central Bank (ECB) will not aggressively cut key borrowing rates. The Euro Area’s current account surplus widened sharply to €52.4 billion in June 2024, compared to €32.4 billion a year earlier. Additionally, the annual inflation rate in the Euro Area rose slightly to 2.6% in July 2024 from 2.5% in the previous month.
GBPINR
The pound traded between 108.65 and 110.43, gaining as signs of economic resilience and moderate inflation led traders to anticipate fewer rate cuts from the Bank of England (BoE). Public sector net borrowing in the UK increased to £3.1 billion in July 2024, up from £1.3 billion in the same month the previous year. Traders are pricing in 44 basis points of rate cuts from the BoE this year, with a 39% chance of a 25-basis point cut in September.
JPYINR
The yen traded in a range of 56.87 to 57.87, gaining as the dollar weakened on expectations that the Federal Reserve might soon lower borrowing costs to prevent an economic downturn. Bank of Japan (BOJ) Governor Kazuo Ueda is set to testify before the Japanese parliament as lawmakers scrutinize the central bank’s decision to raise interest rates in July. Japan’s trade deficit significantly widened to JPY 621.84 billion in July 2024, up from JPY 61.33 billion a year earlier.
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