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Updated January 29th, 2024 at 07:42 IST

Rupee, bonds await Fed outcome, Budget remains key concern

The Rupee closed marginally unchanged against the US dollar at 83.1150 on Thursday, experiencing a slight weekly loss.

Business Desk
Rupee
Rupee | Image:Republic World
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Rupee in focus: Investors are closely monitoring the US Federal Reserve meeting this week, anticipating its impact on the Rupee and bond markets. 

The Rupee is expected to follow trends in Asian currencies early in the week, while bond yields will be influenced by both the Fed's decisions and the forthcoming domestic budget announcement.

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The Rupee closed marginally unchanged against the US dollar at 83.1150 on Thursday, experiencing a slight weekly loss. 

Factors such as the US personal consumption expenditures (PCE) price index, which rose 0.2 per cent in December, and a stronger-than-expected GDP print for the US in the last quarter, have influenced market sentiments.

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Anil Kumar Bhansali, head of treasury at Finrex Treasury Advisors, predicts a stable trend for the Rupee, projecting it to trade within the range of 82.90 to 83.25 in the near term. 

While the Fed is expected to maintain current interest rates, investors await insights from Chair Powell's statement regarding future policy adjustments.

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In parallel, the 10-year benchmark bond yield closed at 7.1760 per cent on Friday, displaying minimal movement over the past fortnight. 

Traders eagerly await details from the federal budget announcement, particularly focussing on deficit and borrowing projections for the upcoming fiscal year.

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Market expectations anticipate the benchmark bond yield to hover between 7.15 per cent to 7.20 per cent until the budget revelation. 

Sources suggest that the government may maintain gross market borrowing levels for 2024/25 similar to the current fiscal year, aiming to moderate borrowing despite economic challenges.

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Parul Mittal Sinha, head of financial markets, India, at Standard Chartered Bank, suggests that net borrowing is likely to remain steady. Meanwhile, ICICI Securities Primary Dealership stresses the importance of adhering to fiscal deficit targets and the pace of fiscal consolidation for achieving long-term financial goals.

Foreign investors and banks remain pivotal players in the bond market, with their activities closely monitored by traders since the beginning of the year. As the global economic landscape evolves, market participants remain vigilant for potential shifts in investor sentiment and policy directions.

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(With Reuters Inputs)

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Published January 29th, 2024 at 07:42 IST

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