Across the bloc, the COVID vaccination rollout programme has started to gather pace after a slower start at the beginning of the year.
Gross domestic product (GDP) in the world’s second largest economy jumped 18.3% in the first quarter, compared to a year earlier, according to official data.
(Bloomberg) -- The Indian rupee has turned into Asia’s worst-performing currency from being the best in the previous quarter. It’s poised for more losses as a resurgence in coronavirus cases to a record threatens to hamstring the economy.The rupee weakened past 75 per dollar for the first time in eight months this week. Federal Bank Ltd. expects it to fall further to 76 by year-end. The currency’s slide may be exacerbated by unwinding of short dollar positions against the rupee, which ICICI Bank Ltd. estimates has grown to $50 billion.The mayhem is also weighing on dollar bonds from the nation’s issuers, which have under-performed Asian peers this month, as India overtook Brazil as the second-worst-hit Covid nation in the world. Stricter restrictions on movement across the country are reviving memories of last year when extended lockdowns squeezed demand and pushed the economy into its worst contraction in nearly seven decades.“Economic growth is going to get more impacted than what we are expecting,” said V Lakshmanan, head of treasury at Federal Bank Ltd. in Mumbai. “We are underplaying the impact of Covid.”Record Covid Rise Reverses a Rally in Dollar Debt: India CreditThe rupee has slumped 2.5% against the dollar so far in April after falling 0.1% in the quarter ended March. It fared better than other Asian currencies in withstanding rising U.S. yields in the last three months thanks to a rare current-account surplus, economic recovery and heavy foreign inflows.The Indian currency rose 0.1% to 74.9650 per dollar on Thursday, paring a loss of as much as 0.4%, amid speculation that the RBI may have sold dollars in the forwards market to support the rupee, according to two Mumbai-based traders, who didn’t want to be cited as they aren’t authorized to speak publicly. Traders are concerned that the rupee’s tailwinds could start fading. Rising commodity prices may push the current-account into a deficit in the fiscal year that started in April, while the central bank’s quantitative easing announced last week is seen adding to the liquidity glut, worsening the rupee’s woes.However, Barclays Plc expects the Reserve Bank of India to defend the rupee using its massive foreign reserves.“The RBI will likely sell USD into this bid as this move is relatively outsized,” said Ashish Agrawal, head of FX and emerging markets macro strategy research. He expects the rupee to climb to 73 per dollar by year-end and sees the latest bout of weakness as a catchup to losses suffered by other emerging market currencies in March.(Updates with the rupee levels in the sixth paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
Traders will be watching the publication of minutes from the ECB later today.
(Bloomberg) -- The Philippine peso and the Thai baht offer a tale of contrasting fortunes, with one faring better than the other against a strong dollar.The peso dropped 1% against the greenback in the first quarter, outperforming the baht whose 4.2% decline made it emerging Asia’s laggard. The divergence is likely to persist in the coming three months as the Philippines’ trade deficit narrows while Thailand’s tourism industry languishes.As a rising dollar reasserts itself, local factors are helping to determine which regional currencies can better withstand the fallout. Still, a weaker exchange rate may not be an undesirable outcome for Asian policy makers, with the likes of the Bank of Thailand consistently arguing against a strong currency to protect exporters.“The Philippine peso has been driven by expectations on its trade balance,” said Eugenia Fabon Victorino, head of Asia strategy at SEB in Singapore. “The baht is dealing with persistently weak portfolio flows which is exacerbated by the propensity of local corporates to raise outbound investments considering the weak domestic demand in Thailand.”The peso rallied to 47.90 to the dollar in mid-February, the strongest since September 2016. It’s being supported by a steady stream of overseas remittances and expectations for the Philippines’ trade shortfall to shrink as virus-related curbs damp domestic demand and imports.A report due Thursday may confirm this, with economists in a Bloomberg survey forecasting that the deficit narrowed to $2.25 billion in February from $2.42 billion the previous month.All these positives have helped offset the impact of falling real interest rates after Bangko Sentral ng Pilipinas kept policy on hold even as inflation quickened. Technicals also favor the Philippine currency, with the dollar-peso currency pair facing resistance at its 200-day moving average, currently around 48.64.In contrast, the outlook for the baht appears less rosy. After bearishly breaching support at around 31.00 to the dollar, the path is clear for Thailand’s currency to fall toward its July low of 31.858.Beyond technicals, the baht lost a pillar of support after Thailand’s long-standing current-account surplus turned into a deficit as tourism collapsed in the face of the pandemic. Equity outflows totaling almost $1 billion in the first quarter may have also hurt the currency.Additionally, the central bank has pledged to keep policy accommodative after lowering its 2021 growth forecast to 3% from 3.2% at a meeting last month.With the baht’s headwinds unlikely to subside anytime soon, it appears more likely than not that the currency will continue to trail its Philippine peer.Below are the key Asian economic data and events due this week:Monday, April 5: Singapore retail sales, Japan services PMI, Thailand CPITuesday, April 6: RBA policy decision, Japan labor cash earnings, China Caixin services PMI, Philippine CPIWednesday, April 7: South Korea BoP current account balance, RBI policy decisionThursday, April 8: New Zealand business confidence, Japan BoP trade and current account balance, Philippine trade balance, Thailand consumer confidenceFriday, April 9: RBA Financial Stability Review, China CPI and PPI, Malaysia industrial productionFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
The Indian rupee posted its first quarterly fall in four on the last day of the 2020/21 fiscal year as a broad rally in the dollar finally rubbed off on the local unit. "Just as INR's artificial relative uptick in mid-March was transient, we think the sharp relative depreciation is more a reflection of reversal of those transient factors than anything structural at play," said Madhavi Arora, lead economist at Emkay Global Financial Services.
European stocks closed higher on Tuesday, as a late surge for financial stocks and car makers helped propel indices higher.
When any currency falls especially against the dollar even today the mainstream convention attributes it to some kind of central banker intent (“devaluation” or its fancier cousin “competitive devaluation”).
European Commission (EC) president Ursula von der Leyen warned that the bloc was "at the start of the third wave of the pandemic.”