August 30, 2024
New Delhi, India
Currency Market Analysis
USDINR
The Rupee strengthened, following a similar trend in its Asian peers and in anticipation of MSCI-related inflows. Fitch affirmed India’s long-term ‘BBB-‘ rating with a stable outlook. Meanwhile, Federal Reserve Chair Jerome Powell warned that any further cooling in the labor market would be unwelcome, but the Fed is prepared to cut rates in September.
EURINR
The Euro dipped as lower inflation boosted the odds of a European Central Bank (ECB) rate cut. While ECB officials indicated a cautious approach to rate cuts, markets are pricing in around 65 basis points of cuts by year-end. Additionally, lending to Eurozone companies slowed slightly in July.
GBPINR
The GBP dropped as investors sought fresh cues about the Bank of England’s interest rate path. The BoE cut its main interest rate by 25 bps in early August, with traders expecting further rate cuts of 41 bps by the end of the year. Prime Minister Keir Starmer mentioned that it would take a long time to rebuild Britain.
JPYINR
The JPY remained under pressure after cautious remarks from Bank of Japan policymaker Himino. The US Dollar rebounded amid a risk-off mood, though the upside is limited due to dovish Fed bets. Japan’s National Consumer Price Index (CPI) increased by 2.8% year-on-year in July.
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