Nifty99000 100%

Sensex99000 100%

Article rating: No rating
Article rating: 4.8
Article rating: 5.0
Article rating: 3.0
Article rating: No rating
Article rating: 5.0
Article rating: No rating
Article rating: No rating
Article rating: 4.5
Article rating: No rating
Article rating: No rating
Article rating: 4.2
Article rating: 5.0
Article rating: 4.0
Article rating: No rating
Article rating: No rating


Dollar steals the show

Author: Siddhesh Ghare/Wednesday, May 16, 2018/Categories: Currency

Dollar steals the show

The Indian rupee lost almost 5.2% since the start of this year, becoming Asia's worst performing currency. Increased demand for US dollar has taken the rupee to its lowest levels in 2018. Strong US economic data and investors’ confidence in inflation boosted the dollar index reach higher.

US Treasury yields surged above 3% mark for the first time since 2014. Investors growing confidence over US inflation numbers, expecting Fed to raise rates further 2 times this year boosted the yields. Diverged monetary policy expectations between Fed and global central banks have favoured the dollar against global currencies.

Surge in crude oil prices amid growing global geo political tensions has also favoured the dollar. In turn, India’s current account deficit increased to Rs 13.69 billion in March from Rs 11.98 billion in February. Foreign investors have pulled out over Rs 15,500 crore from the domestic market in April, the highest in over 16 months. Strong US economic data and robust US corporate results so far have impacted the dollar outflow.

US core CPI index excluding food and energy prices stood at 0.1% in April. US GDP has also risen sharply during Q3 and Q4 previous year but witnessed a mild slowdown in the growth rate in Q1 this year, while annual growth rate is well above the Fed target.

Investors with their early estimates for GDP growth in the second quarter point to a pickup in growth. Meanwhile, until economic data delivers a major downside surprise, the Fed is expected to retain its hawkish stance on policy.

Considering, there will be at least two rate hikes this year from Fed, we expect the yield differential between US 10 and global 10-year to widen further, which should of course favour the USD.

Domestically, investors are concerned about rise in oil prices. The RBI is also expected to retain status quo on interest rates. Considering, these international and domestic factors, we expect the Indian Rupee to weaken to 68.50 levels.

The author is the head of FX Risk Solutions, Karvy Forex & Currencies Pvt Ltd.

Print Rate this article:
No rating

Number of views (417)/Comments (0)

rajyashree guha

Siddhesh Ghare

Other posts by Siddhesh Ghare
Contact author

Leave a comment

Add comment



Ask the Finapolis.

I'm not a robot
Dharmendra Satpathy
Col. Sanjeev Govila (retd)
Hum Fauji Investments
The Finapolis' expert answers your queries on investments, taxation and personal finance. Want advice? Submit your Question above
Want to Invest



The technical studies / analysis discussed here can be at odds with our fundamental views / analysis. The information and views presented in this report are prepared by Karvy Consultants Limited. The information contained herein is based on our analysis and upon sources that we consider reliable. We, however, do not vouch for the accuracy or the completeness thereof. This material is for personal information and we are not responsible for any loss incurred based upon it. The investments discussed or recommended in this report may not be suitable for all investors. Investors must make their own investment decisions based on their specific investment objectives and financial position and using such independent advice, as they believe necessary. While acting upon any information or analysis mentioned in this report, investors may please note that neither Karvy nor Karvy Consultants nor any person connected with any associate companies of Karvy accepts any liability arising from the use of this information and views mentioned in this document. The author, directors and other employees of Karvy and its affiliates may hold long or short positions in the above mentioned companies from time to time. Every employee of Karvy and its associate companies is required to disclose his/her individual stock holdings and details of trades, if any, that they undertake. The team rendering corporate analysis and investment recommendations are restricted in purchasing/selling of shares or other securities till such a time this recommendation has either been displayed or has been forwarded to clients of Karvy. All employees are further restricted to place orders only through Karvy Consultants Ltd. This report is intended for a restricted audience and we are not soliciting any action based on it. Neither the information nor any opinion expressed herein constitutes an offer or an invitation to make an offer, to buy or sell any securities, or any options, futures or other derivatives related to such securities.

Subscribe For Free

Get the e-paper free