RUPEE: TICKS UP ON RBI RATE CUT
DATE: 17/04/2012
Rupee climbed alongside local equities on RBI decision to cut the benchmark repo rate by a 50 bps which now stands at 8%. The Indian rupee bounced back slightly at commencement on Tuesday, April 17, 2012 owing to wide expectation of a rate cut from the central bank and as safe haven flows eased overseas. The domestic currency opened higher by 7 paise at R. 51.62 to a dollar, registered a low of 51.66 and a high of 51.51 so far during the day. Movements in the currency and equities were tempered as the central bank said that the scope for further rate cuts was limited. In the spot currency market, rupee came off its highs and was last seen trading at 51.60 at 11.40 AM IST, up 8 paise or 0.15% as compared to previous close at 51.68.
Key benchmark indices cut spiraled to intraday highs in mid-morning trade only to cut gains later after the Reserve Bank of India cut interest rates by a sharper-than-expected 50 basis points to 8% in its monetary policy review today, 17 April 2012, for the first time in three years to give a boost to flagging economic growth but warned that there is limited scope for further rate cuts. The RBI, however, left unchanged the cash reserve ratio (CRR), the share of deposits that banks must hold with the central bank, at 4.75%, in line with expectations, after cutting it by 125 basis points since January 2012 to ease tight market liquidity. The RBI said its baseline expectation for GDP growth in the fiscal year that ends in March 2013 is 7.3%, compared with an expected 6.9% in the year ended March 2012. It expects headline inflation to end the year at 6.5%, with little deviation expected during the year.
After having initially dipped below 1.3000 levels for the first time in 2-months, EURUSD rebounded strongly rising to as high as 1.3148 during the US hours on Monday. The greenback however, extended its gains during early Asian trades on Tuesday to be currently trading at 1.3096 versus the euro that hammered regional currencies alongside. On the global front, equities rebounded bolstered by upbeat retail sales data from the US although lingering worries over Spain prevented sharp rally. Spanish benchmark 10-year bond yield climbed above the psychological 6% levels on Monday while also registering a daily close above the same (6.07%).
In the domestic currency futures market on the NSE, the forwards month 26 April '12 contract opened on Tuesday, April 17, 2012 at 51.78, higher than the spot market rupee. The contract hit an intraday high at 51.80 and registered a low at around 51.63 so far during the day. At the time of writing, the NSE April 2012 USD/INR contract was trading at around 51.74, lower by 7 paise or 0.14% as compared to previous close at 51.81.
Key benchmark indices cut spiraled to intraday highs in mid-morning trade only to cut gains later after the Reserve Bank of India cut interest rates by a sharper-than-expected 50 basis points to 8% in its monetary policy review today, 17 April 2012, for the first time in three years to give a boost to flagging economic growth but warned that there is limited scope for further rate cuts. The RBI, however, left unchanged the cash reserve ratio (CRR), the share of deposits that banks must hold with the central bank, at 4.75%, in line with expectations, after cutting it by 125 basis points since January 2012 to ease tight market liquidity. The RBI said its baseline expectation for GDP growth in the fiscal year that ends in March 2013 is 7.3%, compared with an expected 6.9% in the year ended March 2012. It expects headline inflation to end the year at 6.5%, with little deviation expected during the year.
After having initially dipped below 1.3000 levels for the first time in 2-months, EURUSD rebounded strongly rising to as high as 1.3148 during the US hours on Monday. The greenback however, extended its gains during early Asian trades on Tuesday to be currently trading at 1.3096 versus the euro that hammered regional currencies alongside. On the global front, equities rebounded bolstered by upbeat retail sales data from the US although lingering worries over Spain prevented sharp rally. Spanish benchmark 10-year bond yield climbed above the psychological 6% levels on Monday while also registering a daily close above the same (6.07%).
In the domestic currency futures market on the NSE, the forwards month 26 April '12 contract opened on Tuesday, April 17, 2012 at 51.78, higher than the spot market rupee. The contract hit an intraday high at 51.80 and registered a low at around 51.63 so far during the day. At the time of writing, the NSE April 2012 USD/INR contract was trading at around 51.74, lower by 7 paise or 0.14% as compared to previous close at 51.81.
| RBI REF RATE | ||||
| Date | USD | GBP | EURO | YEN |
| 16-APR-12 | 51.66 | 81.80 | 67.18 | 64.17 |
| % Change* | -0.47 | 0.17 | 0.72 | -1.06 |
| *As against previous working day | ||||
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