Forex

The Indian rupee slipped 25 paise to 95.33 against the US dollar in early trade on Thursday after Brent crude moved above USD 100 a barrel, stoking worries over India’s import costs. India imports nearly 90 per cent of its crude, and every USD 10 rise in oil can add roughly USD 1215 billion to the annual import bill, putting pressure on the current account and the rupee. In the previous session, the rupee ended 34 paise lower at 95.08. Domestic equities edged up, while foreign investors were net sellers of shares.

The yen surged on Tuesday, marking its strongest rally in two years as expectations grew that the Bank of Japan could raise interest rates. Oil prices, meanwhile, moved close to $100 a barrel after attacks on energy facilities in the Gulf raised supply concerns. Copper hit record highs as the European Central Bank prepared to lift euro zone rates, adding to global market volatility and forcing investors to reassess strategies amid rising inflation and bond yields.

The Indian rupee closed essentially unchanged on Monday, with the central bank supporting the currency through dollar sales. Brent crude rose to $96.6 a barrel, and Goldman Sachs warned prices could reach $120 if attacks on shipping escalate, adding to pressure on India’s current account. After strong U.S. jobs data, markets priced about a 57% chance of a Federal Reserve rate hike this month, while the dollar index eased to 98.9 and Asian currencies were mixed.

The Bloomberg Dollar Spot Index fell 0.7% for the week, though losses narrowed after strong US payrolls data on Friday lifted the implied odds of a September Fed rate hike to about 60%. The yen outperformed, rising about 2.4% against the dollar for its best week since July. Gains were driven by expectations that the Bank of Japan may raise its benchmark rate by a quarter point this month and keep the door open to faster hikes thereafter.

Fed Governor Christopher Waller is set to speak, and he is expected to underscore that a rate hike remains likely ahead of the September 16 FOMC meeting unless incoming data turn unexpectedly dovish. Markets have shifted to a new baseline that the Fed will raise rates in September, keeping the dollar steady after earlier gains. USD/JPY is expected to stay elevated around 160-162 on the hawkish outlook, while the Bank of Canada is seen holding rates at 2.25% as core inflation remains well anchored.

The Malaysian ringgit opened weaker against the US dollar on Wednesday at 4.0380/0445. Analysts linked the move to Brent crude rising to US$95.46 a barrel, which has lifted inflation worries and pushed market pricing for a US Federal Reserve rate hike at the September meeting to 65%. The US dollar index (DXY) was up 0.25% at 99.677 points, adding pressure on the ringgit, according to Bernama.

Sterling fell below 1.3550 versus the US dollar on Tuesday, down 0.4% on the day. The US dollar index rose 0.3% after February CPI increased 3.1% year-on-year, exceeding expectations. UK inflation has eased from peak levels but remains above the Bank of England’s 2% target, limiting room to cut rates. Markets are pricing a 60% chance of a 25-basis-point BoE cut in May, though that could shift if inflation stays sticky.

Kazakhstan’s central bank said it sold foreign exchange worth 374 billion tenge, or about $809 million, in August to hedge gold purchases. It said it will continue selling the same amount in September. The sales are intended to offset exchange-rate risks stemming from its gold purchases, according to Jin10.

Eurozone inflation data came in below expectations, with headline inflation easing to 2.2% from 2.4% and core inflation slowing to 2.7% from 2.9%. The softer readings suggested price pressures are fading faster than markets had anticipated. The euro weakened against sterling, at one point falling 0.4% to around 0.84, a multi-month low, reinforcing bets that the European Central Bank could accelerate rate cuts.

The euro rose 0.15% against the U.S. dollar during Monday’s European session, trading near 1.1600 as the greenback pulled back. Germany’s preliminary CPI accelerated to 2.4% year on year and the harmonized CPI rose to 2.6%, both higher than the prior readings and above market expectations. The figures strengthened the outlook for a tighter European Central Bank policy stance.