Last Updated on 03/10/2022
NRI Newsletter - Market News

TODAY: Monday, 03rd October ,2022 

USD/INR: As on 30th September ,2022 

Another front-loaded hike of 50bps reflects policy urgency with heightened global negative externalities. Clearly, the fast-evolving world order and consistent repricing of Fed’s outsized hikes has tied Emerging Markets’ hands, including that of the Reserve Bank of India (RBI). This exposes the instability inherent in the classic central bank trilemma and trade-offs. The broad narrative on inflation and growth remains unchanged, even as the growth forecast has been reduced by 20bps. External sector focus and INR moves/volatility seem to play on RBI’s mind, even though it doesn’t seem to be perturbed about any external financing and repayment risks.

 

The conscious front-loading gives the MPC some breather on shallow hikes ahead. The RBI is still far from its supposed real neutral rate of 0.8-1 percent, even as today's hike makes the ex-post forward real repo rate positive. At this point, we still think that the RBI would not go too restrictive and the terminal rate could hover near the estimated neutral real rates, implying not more than 50bps hikes ahead. However, the extent of global disruption will remain key. We are closely watching the global pace of inflation deceleration and how the impending recession will shape Developed Markets’ central bank policies, which could influence the RBI. The still-fluid global situation might require frequent adjustments in macro and policy assessments ahead.

MAJOR WORLD CURRENCIES: 

As on 30th September,2022:

USD:

he U.S. dollar edged higher in early European trading Monday, while sterling also gained after the U.K. government agreed to water down its plans for unfunded tax cuts.

 

At 02:45 ET (06:45 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, edged higher to 112.13, close to the one-week low of 111.64 seen late last week.

 

GBP/USD climbed 0.3% to 1.1188 after the British government decided to reverse the proposed scrapping of the highest rate of income tax, a plan that has been widely criticized in the governing Conservative Party as well as the country as a whole.

 

New Finance Minister Kwasi Kwarteng announced his plan to substantially cut taxes, including the 45p highest rate of income tax, as part of a mini-budget on Sept. 23.

 

The need for vast government borrowing to pay for the plan resulted in the value of the pound and government bonds slumping dramatically.

EUR:

The EUR/USD retraces from daily highs of around 0.9853 due to Fed officials expressing the necessity of higher rates for longer, as the US central bank battles elevated inflationary pressures above the 6% threshold, as shown by the Fed’s preferred gauge of inflation, on Friday. At the time of writing, the EUR/USD is trading at 0.9788, below its opening price by 0.29%.

 

A bunch of Fed policymakers crossing news wires, led by Vice-Chair Lael Brainard, expressed that the Fed needs to keep interest rates higher-for-longer, so the bank can attain its goal. She added that the Fed would not pull back prematurely while echoing other colleagues’ expression of not knowing where rates would peak. Later in the same tone, San Francisco’s Mary Daly commented that further hikes were coming and that the Fed is “resolute” in taming inflation.

GBP:

 

The GBP/USD is recovering from earlier losses as the North American session progresses, even though the market sentiment shifted sour as Fed officials reinforced their “hawkish” message of keeping interest rates higher for longer. Therefore, the GBP/USD is trading at 1.1168, gaining 0.46%, after reaching a daily low of 1.1024.

 

US equities are trading in the red. On Friday, a slew of Fed officials led by the Fed’s Vice-Chair Lael Brainard crossed the news wires after critical US economic data was released.

USD/INR as on 30th September ,2022 

Currency

OPEN

HIGH

LOW

CLOSE

USD/INR

81.62

81.69

81.15

81.34

 

 

Forward premium (%) as on 30th September ,2022 

Periods

1 Month

3 Month

6 Month

12 Month

Premium

5.38/5.46

3.35/3.40

3.03/3.06

2.84/2.85

       

 

USD/INR Cash/Tom/Spot Levels: (in Paisa)                                      

(Updated as on 03RD Oct,2022 @ 09.00am)

 

Cash/Tom: 0.25/1.25                      Cash/Spot: 1.50 /3.75 

Tom/Spot:  1.25/2.75                      Spot/Next:  0.25/1.25                    

 

Cash Date:30th Sep 2022 

Tom Date: 04th Oct 2022 

Spot Date: 06th Oct 2022 

Outlook for the day 03RD Oct ,2022:

USD/INR is expected to trade in the range 81.40 to 82.00 upside . All major currencies are expected to go Downside against the US dollar.

MAJOR WORLD CURRENCIES:

As on on 30th September,2022 

CURRENCY

OPEN

HIGH

LOW

CLOSE

GBP

1.1113

1.1234

1.1020

1.1160

EUR

0.9815

0.9853

0.9733

0.9799

AUD

0.6499

0.6524

0.6389

0.6402

JPY

144.44

144.82

144.18

144.75

CHF

0.9757

0.9877

0.9737

0.9868

XAU

1660.6217

1675.19

1658.32

1659.67

 

 

 

GOLD :

old price is moving back and forth in a familiar range above $1,650, as the investors refrain from placing any directional bets amid rife geopolitical tensions concerning Russia and Ukraine, aggressive Fed rate hike bets and surging oil prices. Meanwhile, the US dollar is trading choppy but slightly on the downside, limiting the downside in the bullion. The UK tax policy U-turn put a sudden bid under GBP/USD, inducing fresh weakness in the dollar while helping the metal defend mild gains. Attention turns towards the US ISM Manufacturing PMI after the euro area and the UK S&P Global final Manufacturing PMIs failed to impress the market. The main event risk this week, however, remains the US Nonfarm Payrolls data due for release this Friday.

  Foreign Currencies

  Updated: 17:30 hrs. (12:00 GMT) on 30th September,2022 

USD/INR: 80.9950[FXIR]

Against

USD

INR

1 EUR    =

0.9747

79.2870

1 GBP   =

1.1042

89.8211

100 JPY =

144.64

56.2396

1 AUD   =

0.6464

52.5814

1 CHF    =

0.9810

82.9205

 

Precious Metals

Updated: 17:30 hrs. (12:00 GMT) as on 30th September,2022 

Gold ($/oz)

1663.09

Silver ($/oz)

18.96

 

Stock Indices

(As on 30th September,2022)

 

Index Close

29th September

30th September

BSE Sensex

56409.96

57426.92

NSE Nifty

16818.10

17094.15

Dow Jones

29225.61

28725.51

NASDAQ

10737.51

10575.62

 

 

 

 

 

 

 

 

 

 

 

 

 

 

              Major Economic Data Releases for the Day

Date

Region

Time (IST)

Description

03/10/2022

USD

07.30 PM

ISM Manufacturing Plant PMI

The views contained herein are those of individuals and not necessarily those of the Bank.  This is for information purpose only and no recommendations are intended.  While due care has been taken in preparation of this communication, IOB cannot be held responsible for any consequences of any decisions based on this information. Comments/Suggestions may be freely emailed to feddeal@iobnet.co.in