Major developments

  • In the United States, consumer prices rose at the fastest annual rate since 2008, with the CPI jumping 5% in May from the previous year.

  • The ECB has chosen not to signal when it could start cutting its stimulus package during a pandemic and expects inflation to stay below target for the foreseeable future.

  • India’s foreign exchange reserves broke the $ 600 billion mark for the first time after rising $ 6.84 billion in the week ending June 4. Reserves jumped to a record $ 605 billion.

USDINR Weekly Performance and Outlook

  • USDINR widened to open at 72.86, however, the dollar strengthened against the rupee to close the week at 73.07.

  • The rupee erased the gains against the dollar because the big state banks bought the greenback persistently, likely on behalf of oil importers who stepped up their demand for the dollar after seeing the further rise in the price of the dollar. crude oil.

  • The World Bank downgraded India’s growth forecast for fiscal 22 to 8.3 percent from 10.1 percent, citing the impact of the second wave on economic activity.

  • The RBI moved the 10-year benchmark G-Sec to PDs in the weekly auction. The PDs, who subscribe to the G-Sec auction, had to recover 9,975.76 crore of this paper out of the total notified amount of 14,000 crore.

  • In addition to the staff economic projections and the dot plot, the focus will also be on what the Fed has to say about the record daily absorption of liquidity through reverse repurchase agreements.

  • Market participants have high expectations for the Fed’s June 16 monetary policy. Two key factors the Fed is focusing on are inflation and the number of jobs. Core PCE, the best indicator of inflation, rose faster than expected to 3.1% in April as price pressures increased in the growing US economy. But the labor report still falls short of the rating the Fed plans to cut.

  • The Indian Rupee is expected to trade with a neutral to bullish bias. The focus will be on retail sales, industrial production, the Fed’s decision on interest rates and initial US jobless claims data and WPI and CPI inflation data from the ‘India. USDINR is expected to trade in a range of 72.75 to 73.70 over the coming week.

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