Sharp Increase in US Yields on Rate Outlook Led to a Rise in USD/INR

  • by THO
  • 1 week ago
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opened the day a lot firmer at 74.5050 registering an overnight gain of 25 paise/USD due to a sharp increase in US yields and also the rise in US dollar against the major currencies.

In the March-June 2021 quarter, the translation loss was at 1.14%. In the July-September quarter, the translation gain was at 0.12% and in the October- December 2021 quarter, the translation loss was minimal at 0.06% in absolute terms. In the last quarter of the financial year, we do not expect the rupee to depreciate beyond the 75.50 level with the translation loss projected at 1.50% in absolute terms. The depreciation in the rupee exchange rate is expected to be around 2.75% or lower in the current financial year.

India’s December exports surged to USD 37.29 billion, the highest ever monthly performance, posting a Y-O-Y growth of 37%. India’s imports also increased very sharply to USD 59.27 billion in December widening the trade deficit to 21.98 billion compared to USD 23.7 billion in the previous month. Exports in the April-December period were at USD 299.74 billion. In the last 3 months of the current fiscal, it seems to be possible to achieve exports of over USD 100 billion taking the overall exports to USD 400 billion,  meeting the target set by the Government. To maintain export competitiveness, it is imperative to keep the rupee exchange rate on a weaker bias close to 75 levels.

The MSCI world index has surged 17% in 2021, its third consecutive year of double-digit gain. US indexes poised for bigger 3-year gain since 1999. Both and WTI were up more than 50% in 2021 spurred by global economic recovery and producer restraint. set for worst performance in six years and silver fell by a whopping 11.56% in 2021.

Most of the Asian currencies are trading lower on concerns over Omicron. The spread of Omicron has put a net dampener on the growth recovery within the EM Asian region.

The Indian rupee opened the first working day of the New Year tracking domestic equity markets that opened significantly higher in Monday’s trade. Indian stock markets maintained a positive note driven by broad-based buying across sectoral indices with IT and auto stocks outperforming. On Monday, the and recorded a rise of 1.60% and 1.57% respectively. Today at this point in time, both the BSE Sensex and Nifty 50 are trading close to a gain of 0.50%.

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