|Day's range||71.438 - 71.793|
|52-week range||68.2023 - 74.9000|
(Bloomberg) -- The Indian rupee’s outperformance against more export-dependent currencies such as the Korean won has likely come to an end, with JPMorgan Chase & Co. seeing risks shifting to the downside.While JPMorgan had favored the rupee since the U.S.-China trade war took a turn for the worse in May, it now expects the currency to show higher beta to moves in yuan, which it tips to keep falling this year and into the first half of 2020.The weaker outlook for the rupee is linked to waning internal and external growth, it being overvalued in real effective exchange rate terms, and to an easing in the tailwind of falling U.S. real rates, Jonathan Cavenagh, head of JPMorgan’s foreign-exchange strategy for emerging markets Asia, wrote in a recent note.The rupee is down 3.9% over the past month, making it the worst performer in Asia.JPMorgan sees it weakening to 73-74 to the dollar in coming months, from about 71.60 on Tuesday.To contact the reporter on this story: Subhadip Sircar in Mumbai at email@example.comTo contact the editors responsible for this story: Tan Hwee Ann at firstname.lastname@example.org, Brett Miller, Ravil ShirodkarFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- The risk of overseas investors in rupee bonds getting caught wrong-footed and weakening India’s currency further is surging as losses this month outpace Asian peers amid mounting geopolitical tensions in the region.A sharp drop in the rupee may wipe out most of the profits for offshore investors as they don’t usually hedge currency risk for short-term debt investments into the country, according to Samir Lodha, chief executive officer at QuantArt Market Solutions, a Mumbai-based currency risk advisory. Any sell-off in foreign holdings of Indian corporate and government bonds may set off a spin which weakens the currency further.The surge in inbound investments into rupee bonds was largely driven by carry trades, adding to fears of a quick reversal in flows if the drop in rupee is not checked. The currency slumped more than 3% against the greenback this month, setting it up for its second-worst monthly loss in four years, as India escalated tensions with Pakistan by revoking seven decades of autonomy for the state of Kashmir. That added to turmoil in emerging markets stemming from the U.S.-China trade spat.“Though the mounting bets were safe as long as the currency was stable, now many are staring at their returns getting wiped off,” Lodha said by phone. “Any large-scale unwinding of bond holdings by foreign investors risks triggering a downward spiral for the rupee to a fresh low.”Foreigners were enthusiastic about buying Indian bonds when the government eased limits applicable for debt purchases by offshore buyers, because many developed markets offer very low yields. India has been a natural fit for investors borrowing funds in a cheaper currency to invest in markets offering higher interest rates, Lodha said.While the rupee has depreciated in seven of the past 10 years, most of the decline was in a calibrated manner. Record foreign-exchange reserves of $430 billion and the most politically stable government in three decades give policy makers power to control the drop.Even amid all the risks “there are very few countries like India with such high-interest rates that make them attractive carry trade destinations. If the panic spreads, foreigners have to pull funds out of India or will have to hedge their exposures which will eat into returns,” said Lodha.(Updates with rupee movement in third paragraph.)To contact the reporter on this story: Anurag Joshi in Mumbai at email@example.comTo contact the editors responsible for this story: Andrew Monahan at firstname.lastname@example.org, Anto Antony, Beth ThomasFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
India's rupee will recoup this year's losses against the dollar over the coming 12 months, according to market strategists polled by Reuters, who said the issuance of sovereign bonds in foreign currencies may help prop it up. Rising political risk after India revoked the special status of Kashmir - the Himalayan region that has long been a flashpoint in relations with Pakistan - knocked the rupee on Tuesday, pushing it to a 5-month low of near 71 per dollar. Emerging market currencies tumbled on Monday following an escalation in the U.S.-China trade war, with the Chinese authorities allowing the yuan to weaken to above 7 per dollar for the first time in over a decade.
Gold prices in India jumped over 2% on Monday to record levels, following gains in overseas markets and as the rupee fell to a five-month low, dampening demand further in the world's second-biggest consumer of the precious metal. Local gold futures hit an all-time high of 36,990 rupees ($524.70) per 10 gram, taking their gains to more than 17% in 2019. Dealers were offering a discount of up to $36 an ounce over official domestic prices, the highest since August 2016.
India is infusing an additional 100 billion rupees in housing finance companies to boost lending in the sector, a government statement said on Friday, at a time when the shadow banking industry is under stress due to lack of liquidity. "To further ease flow of funds in the housing sector, the National Housing Bank is making available from today, a liquidity infusion facility of 100 billion rupees for housing finance companies as additional liquidity," the government said. Finance Minister Nirmala Sitharaman is also scheduled to meet Indian bankers on August 5 to review credit growth in various sectors, the statement said.
The Punjab National Bank (PNB) on Saturday said it had reported a borrowing fraud of 38.05 billion Indian rupees ($556 million) in Bhushan Power & Steel Ltd's account to the Reserve Bank of India (RBI). The fraud, "alleging diversion of funds from the banking system" was being reported to the RBI on the basis of the findings of forensic audit and the federal police filing a first information report, the PNB said in a statement to stock exchanges. "It has been observed that the company has misappropriated bank funds, manipulated books of accounts to raise funds from consortium lender banks," PNB said, adding that it had already made provisions of 19.32 billion rupees in Bhushan's account.
India's state-run Punjab National Bank (PNB) on Saturday said it had reported a borrowing fraud of 38.05 billion Indian rupees ($556 million) in Bhushan Power & Steel Ltd's account to the country's central bank. The fraud, "alleging diversion of funds from the banking system" was being reported to the Reserve Bank of India (RBI) on the basis of the findings of forensic audit and the federal police filing a first information report, the PNB said in a statement to stock exchanges. "It has been observed that the company has misappropriated bank funds, manipulated books of accounts to raise funds from consortium lender banks," PNB said, adding that it had already made provisions of 19.32 billion rupees in Bhushan's account.
Pakistan's rupee dropped to another record low on Wednesday, sliding more than 3% in a day, the central bank said. The rupee closed at 161.94 against the dollar in the interbank market, continuing a slide since Pakistan signed an agreement with the International Monetary Fund last month for a $6 billion loan. In the open market it was selling at 162.50 on Wednesday, money exchange dealers said.
Pakistan's new central bank governor Reza Baqir on Monday dismissed the idea of a free floating rupee as he outlined reforms aimed at ending instability in the South Asian economy. Baqir was last month appointed to lead the central bank in Pakistan, which has been hit by ballooning current and fiscal account deficits and repeated devaluations of the rupee. Pakistan's policy is a "market based exchange rate system" that follows supply and demand, but that will not be left completely to the market, Baqir said in his first press conference as State Bank of Pakistan (SBP) governor.
The Reserve Bank of India (RBI) on Friday fined Kotak Mahindra Bank Ltd 20 million rupees ($288,525) for not furnishing details about the shareholdings of its majority stakeholders and its plans for complying with stake dilution norms. The RBI said it decided to impose a penalty after reviewing the bank's reply to a notice seeking an explanation about why it had not complied with regulatory norms. "RBI came to the conclusion that the bank had failed to comply with the directions issued by RBI and decided to impose monetary penalty on the bank," the Reserve Bank of India said in a statement.
Indian shares ended lower on Thursday, after the central bank cut its benchmark interest rate by 25 basis points, while also changing its policy stance to "accommodative," in a widely expected move. The broader NSE Nifty fell 1.48% to 11,843.75, while the benchmark BSE Sensex ended 1.38% lower at 39,529.72, as the Reserve Bank of India (RBI) lowered the repo rate to 5.75% and cut the reverse repo rate to 5.5%. "When the GDP numbers were out, the market did not react negatively and instead started looking toward the rate cut, so the rally has already happened," said Vidya Bala, Head of Mutual Fund Research at FundsIndia.com.
The rupee will fall further against the U.S. dollar over the next 12 months than previously thought, hit by slowing growth momentum and an escalating global trade war that has recently threatened to engulf India, a Reuters poll found. The currency moved only marginally against the dollar in May despite a steep fall in oil prices, the country's major import, and a landslide victory for Prime Minister Narendra Modi's Bharatiya Janata Party, something previous polls had said would be the best outcome for the rupee. Last year, a deep sell-off in emerging markets and a widening domestic fiscal deficit, exacerbated by rising oil prices, pushed the rupee down nearly 9% and that weak trend is not expected to change over the coming year.
Pakistan on Thursday approved a 20-billion rupee ($134 million) fund to help boost its stock market after big losses over the past two years, the finance ministry said. Pakistan's stock market has been one of the world's worst performing over the past two years, with its benchmark 100-Share Index losing almost a third of its value since hitting an all-time high of 53,127 points in May 2017. The market has been hammered because of political instability and a weakening economy that has seen growth slump amid a blow-out of the fiscal and current account deficits, leading to a provisional agreement with the International Monetary Fund for a $6 billion bailout last month.
Less than 10 months after coming to power in Pakistan with visions of creating a welfare system to lift millions out of poverty, economic crisis has forced Prime Minister Imran Khan into the hard realities of an IMF bail-out. In the days since last week's agreement in principle with the International Monetary Fund for a $6 billion loan, the rupee currency dropped 5 percent against the dollar, and it has now lost a third of its value in the past year. Financial crises have shaken the world's sixth-largest nation repeatedly over the years, threatening the stability of a nuclear-armed state plagued by Islamist militancy, and while the IMF programme may help stabilise the economy, it will bring more hardship.
The weaker oil prices helped currencies of major net importers of the commodity, such as India and Thailand, although moves in other parts of the region's emerging foreign exchange market were limited by concerns about the worsening Sino-U.S. trade war. In India, Modi's thumping win puts his Hindu nationalist party on course to increase its majority on a mandate of business-friendly policies and reinforces a global trend of right-wing populists sweeping to victory. The rupee gained as much as 0.4% to touch a session high of 69.74 against the dollar, en route to a weekly gain of about 0.7%.
The British pound adds to its losses against major rivals on Thursday, with some bears raising the remote possibility that U.K. Prime Minister Theresa May’s Brexit struggles could drag Britain’s currency to parity with the buck.
* Early counting trends suggest massive mandate for ruling party * South Korean won scales one-week high * Indonesian rupiah recovers from previous session's losses (Adds text, updates prices) By Aby Jose Koilparambil May 23 (Reuters) - The Indian rupee gained as much as 0.4% on Thursday after early counting trends suggested a comfortable victory for Prime Minister Narendra Modi's Bharatiya Janata Party-led coalition, setting the stage for his second term with a stronger mandate. Exit polls had predicted a clear win for Modi in the election held over April and May, and the initial counting leads came in line with those predictions. Most other Asian currencies drifted lower but fared better than regional equities markets as stability in the Chinese yuan helped stave off pressure from U.S.-China trade tensions.
Modi is likely to return to power with an even bigger majority in parliament after a mammoth election that ended on Sunday, the exit polls showed, a far better showing than expected in recent weeks. The rupee put on as much as 1.2% to 69.36 against the dollar, its best intraday percentage gain since Dec. 18. Rushabh Maru, currency and commodity analyst with Anand Rathi Shares and Stock Brokers, said most exit polls have projected a "thumping majority" for the ruling government.
The outlook for India's rupee has deteriorated from just a month ago as the outcome of a more than month-long national election draws near, according to foreign exchange strategists polled by Reuters. It lost about 1 percent against the dollar last month due to a significant surge in fuel prices - India's largest import - and a strengthening U.S. currency. The Reserve Bank of India has also cut the main repo rate twice in the run-up to the election, putting it at 6.0 percent, 50 basis points lower than where it was at the start of the year.