RBI increases gold purchases to diversify forex reserves, with gold value contributing to record $648.5 billion. Gold acquisitions aim to hedge against inflation and currency risks, with increasing faith in gold amidst US dollar volatility and declining dollar reliability. Moreover, the over 7% appreciation in international gold prices since February has also helped in boosting the value of gold in reserves.
RBI increases gold purchases to diversify forex reserves, with gold value contributing to record $648.5 billion. Gold acquisitions aim to hedge against inflation and currency risks, with increasing faith in gold amidst US dollar volatility and declining dollar reliability.
State-run banks were mildly selling dollars towards the close of the session, a foreign exchange trader at a foreign bank said. Exporters were also active during the session, helping curb the rupee's losses, the trader added. Most Asian currencies declined on the day, with the Korean won down nearly 0.8% and leading losses.
Bhansali further noted that the rupee which fell to 83.40 in the Non-deliverable Forwards (NDF) market on Wednesday evening recovered to an opening of 83.32 on Friday morning. "As RBI may protect it from depreciation beyond 83.40 exporters may sell at this level for all near term exports," he said.
Asian currencies all gained as CNH rose to 7.2397 levels as markets await US CPI data which is expected to come at 3.4 per cent against last month data of 3.2 per cent, Bhansali said, adding that the US FOMC meeting minutes are also to be released tonight alongside the Federal Budget Balance.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.07 per cent higher at 104.37 on declining expectations of a rate cut by the US Federal Reserve following a strong jobs report and hawkish comments from Fed officials last week. Read more:
A moderation in crude oil prices on easing tensions in the Middle East is also likely to assist the rupee, traders said. Brent crude oil futures were last quoted down 1.6% at $89.70 per barrel. Treasury yields rose after data showed the U.S. economy created more jobs than expected in March, prompting a pullback in odds of a rate cut at the Fed's June meeting.
Gold closed at a record high of $2330 amidst escalating Middle East tensions, positive US economic data, and hints of potential rate cuts by the Fed Chair. Geopolitical tensions and economic indicators will continue to drive market sentiment. . Hotter than expected CPI inflation and contained geopolitical tensions will weigh on the metal. Resistance is at $2360/$2400 and support at $2300/$2250/$2200. A short term correction won't be surprising.
Gold closed at a record high of $2330 amidst escalating Middle East tensions, positive US economic data, and hints of potential rate cuts by the Fed Chair. Geopolitical tensions and economic indicators will continue to drive market sentiment. . Hotter than expected CPI inflation and contained geopolitical tensions will weigh on the metal. Resistance is at $2360/$2400 and support at $2300/$2250/$2200. A short term correction won't be surprising.
Forex traders said the rupee is likely to trade with a slight negative bias on the surge in crude oil and gold prices. Renewed geopolitical tensions in the Middle East and selling pressure from FIIs may also weigh on the rupee. On the domestic equity market, the 30-share BSE Sensex was trading 107.27 points, or 0.14 per cent lower at 74,120.36 points. The broader NSE Nifty was down 50.05 points, or 0.22 per cent, to 22,464.60 points.
The dollar index was at 104.2 after falling 0.5% on Wednesday, as Federal Reserve Chair Jerome Powell maintained his baseline outlook that rates will fall "later this year". U.S. bond yields also slipped after rising initially as U.S. private payrolls rose more than expected in March. Read on to know more:
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