INDIA: Rupee Weakens Following FX Swap Auction, 4Q GDP Data Due Later Today
Feb-28 09:33
According to Reuters, the RBI intervened on Friday when the rupee dropped to 87.40/USD - a level that bankers said was a key support for the rupee - but the currency has since weakened past this level as the results from the $10bln FX swap auction are announced. Reuters said yesterday significant interest from companies seeking to hedge long-duration dollar liabilities and from lenders looking to raise rupee funds was expected. The RBI received around $16bln of bids.
- Meanwhile, Bloomberg report that the RBI has been nudging lenders to participate more in the uncollateralized money market in efforts to improve the monetary policy transmission, according to people familiar with the matter. The recent calls by the RBI come amid a backdrop of repeated spikes in the call money rate.
- INR weakness at the start of the session stemmed from renewed concerns over tariffs following a post on Truth Social from President Trump yesterday, which weighed on sentiment across Asia FX. A sell-off across major equities further hindered emerging market currencies.
- BofA note that the RBI had earlier kept a rather hands-off approach toward INR moves and tolerated higher volatility for a while, but as positions appeared to become one-sided, it had to eventually intervene heavily to stabilise the currency.
- GDP data is set for release at 10:30GMT/16:00IST, with India’s GDP growth expected to rebound to +6.2 Y/Y in 4Q24 from +5.4% in 3Q24, as per an analyst survey.
- Despite the anticipated acceleration, SocGen noted earlier in the week that “real GDP data was failing to align with multiple high frequency data and that the use of faulty GDP deflator was over-estimating the growth data.” Meanwhile, Bloomberg Economics expect growth to accelerate to +5.7%, but note that would “still be a slow pace relative to potential growth, which we estimate at 7.0%.”
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
BONDS: Looking Through Sell Off In Crude
Jan-29 09:28
No reaction in core global FI as crude oil benchmarks fall by ~$1 over a 30-minute window.
- Our commodities team doesn’t see any driver for the move in crude, with an uptick in the broader USD much more measured over the same timeframe, so that lacks explanatory power.
- Brent through yesterday’s low but within the multi-session range. Yesterday’s low in WTI holds.
EURIBOR OPTIONS: Large Call Spread trades for more
Jan-29 09:22
ERM5 98.12/98.25cs, bought for 0.5 in 55k Total, desks suggest that this is a cover.
GERMAN AUCTION PREVIEW: 2.50% Feb-35 Bund
Jan-29 09:14
This morning, Germany will hold its second 10-Bund auction of the year. On offer will be E4.5bln of the 2.50% Feb-35 Bund.
- The size is a step down from the E5.0bln seen at the last auction of this issue in January (when the Bund was launched); however, the size is consistent with recent Bund re-opens.
- Recent auctions in the German 10y segment have passed smoothly, with solid bid-to-covers (in a 1.83x to 2.40x range since July), bid-to-offers (1.52x to 1.93x range since July) and the low prices above the secondary market mid-prices throughout 2024.
- For the last 2.50% Feb-35 Bund auction on 8 January, the bid-to-cover stood at 2.12x, while the bid-to-offer came in at 1.60x.
- Bund positioning currently appears flat, and seems to have been characterized by a reduction of longs during the last week. See our Europe Positioning Indicator here: https://media.marketnews.com/MNI_PI_28012025_133af9ff97.pdf
- The political situation in Germany is characterized by some uncertainty at the moment amid snap elections being scheduled for February 23. However, the mainstream parties are expected to be able to form a functioning government as of now - so we don't expect an impact on today's Bund auction from that.
- The next German auction will be E5bln of the 2.40% Apr-30 Bobl (ISIN: DE000BU25042) on February 11, while the 2.50% Feb-35 Bund will be reopened next on February 19. Note that we also pencil in the possibility of a 30-year Bund auction next week.
- Timing: Results will be available shortly after the bidding window closes at 10:30GMT / 11:30CET.
Trending Top
May-09 09:49
May-09 05:50
