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https://lnkd.in/giFWrPJZ The USD eases, oil prices are weak, equity markets are up, and US yields are mixed as rates continue to take center stage. The USD eases in early trading but... #piifx #paymentsinternational

Can RBI prevent sharp INR fall? Over the past year, the RBI had aggressively intervened, reducing volatility to 20-year lows and making the rupee the fifth-best performing currency among 25 global currencies. In comparison recent moves from 84.00 to 85.75 has been very sharp, of course relatively. Concerns are also floating around falling Fx Reserves of RBI and RBI's ability to control INR from sharp depreciation. Fact is, RBI holds ample reserves and tools to intervene effectively and stabilize the rupee when needed, ensuring it can prevent a currency crisis. The current reserves were built during the period when INR was trying to appreciate. A reserve of USD 500bn. + along with other tools like swaps, Fx forward, Rule change etc. is sufficient to prevent attacks on INR and a currency crisis. However It is crucial for the RBI to maintain a confident and firm stance both verbally and in action. If Speculators and traders perceive shakiness then the positioning will continue to be short INR. Hence a strong stance is always required from central bank's Fx management. To ensure stability, RBI must: 1)Intervene decisively when necessary to reassure markets. 2)Communicate its confidence clearly and confidently to discourage speculative attacks 3) Allow the rupee to depreciate gradually in line with peers to maintain trade competitiveness and balance. Containing volatility is good but neither killing volatility nor allowing reckless volatility is healthy. And for corporate hedgers and fund traders, options should work out well when done with good understanding. hashtag #RBI hashtag #Fx hashtag #INR hashtag #EM

https://lnkd.in/gY36VZ6g The USD strengthens, oil prices are steady, equity markets are up, and US yields rise on dovish rate expectations. Currency markets hold steady, while the USD ... #piifx #paymentsinternational

https://lnkd.in/gT_GA3wG The USD eases, oil prices are lower, equity markets are down, and US yields ease as markets focus on US Job data. Currency markets remain cautious heading into today's US... #piifx #paymentsinternational

https://lnkd.in/gjvhGCpq The USD slips, oil prices weakened, equity markets are up, and US yields steadied on soft landing optimism. Currency markets edge higher as the USD slips, and US yields find support as expectations of a... #piifx #paymentsinternational

BOJ’s Ueda Might Have Been Reprimanded by PM Kishida on His FX Remark   Some market participants smell a shift in BOJ Governor Kazuo Ueda’s mindset after he had what he described as “a regular exchange of views” in Prime Minister Fumio Kishida’s office on May 7 JST. We rarely see a central bank’s chief vividly discloses FX was discussed, given the macro101 – Central banks do not seek to directly control currency rates with monetary policies.   To grasp how meaningful this change in Ueda’s tone is, we must remember what the recent yen weakening was described as at his controversial post-April MPC presser: “Ignorable.” Since then, the BOJ boss has been severely criticized for overlooking the currency slump, which partly stems from investors’ bearish outlook on Japan’s long-term growth potential.   Indeed, the yen plummeted to 160.24, quoted via EBS on April 29, the following trading day after the MPC, when Tokyo reportedly intervened to rescue the currency hitting the highest since April 1990. On May 1, or two days later after the first suspected intervention, the second yen-buying operation probably took place, according to BOJ accounts.   Some market participants say Ueda is probably trying to reverse his previous commentary, in which the ongoing yen’s descent was depicted as immaterial to trend inflation in Japan and not requiring a policy response. Following the meeting with Kishida, the Governor said that the BOJ will closely monitor developments of weak yen weighing in on underlying price increases.   The dollar yen trades just a shy of 155.00 as of 10:15am Wednesday JST despite verbal warnings from Ueda and Finance Minister Shunichi Suzuki. Eyes are on Ueda’s speech planned for 5:30pm Wednesday, with market expectations for him to turn hawkish. That said, a London-based trader says the BOJ sees no urgency to modify its policy as Treasury yields are tumbling across the curve.

https://lnkd.in/g4pNkTXF The USD eases, oil prices weaken, equity markets are mixed, and US yields ease as high yields sour the risk-on mood. Currency markets are steady ahead of today's... #piifx #paymentsinternational

Idle forex scenarios expected on 4th June: Scenario 1: BJP/NDA 400+ majority We may see drastic downfall in USDINR with agressive influx of foreign flows in equities and debt. USDINR can be expected to touch down 82.50 from where aggressive RBI intervention is expected to save exporters misery Scenario 2: BJP/NDA 350+ majority This is the idle case expected by market and should result in non-event for both equity as well as currency. Little rejoice may be there in equities but broadly markets expected to be sideways Scenario 3: BJP/NDA falling short of majority This may result in massive outflow of foreign money with USDINR expected to touch lifetime high 84.00 where we may see RBI on offers. Equities and Bonds will also the heat for quite some time. Most likely, Exit polls on 1st June is likely to be the main event than the actual D-day as we may know the consensus by then.

Whether The Reserve Bank’s Intervention In NDF Market Will Stop Depreciation Of Rupee Against US Dollar ? The Reserve Bank of India is increasingly relying on interventions in the non-deliverable forwards (NDF) market to stabilise the rupee (which hit to high low of ₹84.50 against 1 US$ in recent times), moving away from traditional methods in the local over-the-counter (OTC) spot market. In a notable shift, the RBI is targeting the NDF market to manage rupee volatility while safeguarding its foreign exchange (FX) reserves. Traditional interventions in the OTC spot market are being complemented by cost-effective NDF transactions, which settle differences between contracted rates and prevailing spot prices. This approach emerged as a strategic move to influence local market sessions preemptively, especially during volatile events like the Iran-Israel as well as Russia-Ukraine confrontation. The RBI’s shift to NDF interventions is a tactical move to stabilise the rupee without depleting large amounts of FX reserves. This not only boosts market confidence but also highlights the central bank’s innovative measures to manage short-term volatility effectively. ◼️What Is Non-Deliverable Forward Contract? An NDF is similar to a regular forward foreign exchange contract, except at maturity the NDF does not require physical delivery of currencies, and is typically settled in an international financial center in U.S. dollars. A forward foreign exchange contract is an obligation to purchase or sell a specific currency on a future date (settlement date) for a fixed price set on the date of the contract (trade date). For an NDF contract at maturity, settlement is made in U.S. dollars the other currency, usually an emerging market currency with capital controls, is "non- deliverable”. Thanks for reading….

The Yen Interest Rate Market: Key Updates and Insights   With inflation expected to persist in Japan, the market participants anticipate further interest rate rises and are preparing for volatility increases in 2025, driving greater market activity and participation. Trading in JPX’s yen interest rate market- interest rate swaps, JGB repo, listed 10-year JGB Futures, and listed 3-Month TONA Futures- surged in 2024. Alongside this, JPX is introducing multiple initiatives, including Cross-margining for interest rate swaps and 3-Month TONA Futures in March 2024, aimed at enhancing trading and clearing efficiency in the yen interest rate market. Stay updated on the latest trends and market dynamics ahead of the Bank of Japan’s meeting on January 23-24. Discover more in this article: https://lnkd.in/g75Kx3Hb