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INR/HKD (INRHKD) News
Global stock markets are tumbling, yet India stands apart—its lack of AI exposure has paradoxically become an advantage.
Over the past month, India's Nifty 50 Index rose by approximately 1% against the broader market trend, while the MSCI Emerging Markets Index declined by more than 9%. As global AI-related trades cooled, India’s relatively low exposure to AI became an advantage, attracting capital inflows. Additionally, falling oil prices, a stabilizing rupee, and improving earnings expectations provided further support. However, high valuations remain a key constraint, with over 30% of index constituents trading at price-to-earnings multiples above 50x, making it difficult to fundamentally reverse the prevailing trend of capital outflows.
Strategists said a U.S.-Iran deal would drive a rebound in emerging market currencies and bonds.
Strategists said the prospect of a durable peace agreement between the U.S. and Iran has triggered gains in emerging market currencies and bonds, potentially marking the start of a stronger rally. The MSCI Emerging Markets Currency Index rose on Monday following the announcement by the United States and Iran of a temporary agreement to reopen the Strait of Hormuz. JPMorgan last week upgraded its rating on emerging market currencies to overweight, while Wells Fargo & Co noted that Asian currencies—particularly those linked to technology-driven economies—stand to benefit from improved market sentiment. Since the outbreak of war in late February, emerging market bonds and currencies have remained under pressure, as rising oil prices have weighed on energy-importing nations, fueled inflation, and intensified market concerns over monetary tightening.
“Peace Trade” Emerges! Bank of America Identifies Five Top Winners, with Most Oversold Assets Seen as Most Promising
The Trump administration, facing dual pressures from inflation and declining approval ratings, finds accelerating the resolution of the U.S.-Iran conflict to be its optimal choice, with rising asset prices serving as a core pillar supporting the 'America First' strategy. Bank of America strategist Hartnett has released a 'Peace Winners' list.
Express News | Tax recovery impacts imports, India’s April gold imports hit a near 30-year low
Industry and government sources said that due to banks being hit by unexpected tax recoveries, India's gold imports in April are expected to drop to about 15 tons, the lowest level for the month in nearly three decades (excluding the pandemic period of 2020), which could put pressure on global gold prices. Surendra Mehta, secretary of the India Bullion and Jewellers Association, stated that since Indian customs began imposing a 3% integrated goods and services tax on gold, banks importing the majority of India's refined gold have suspended shipments. Sources indicated that India's imposition of a goods and services tax on gold, combined with the previous delay in authorizing banks to import gold bars, may be aimed at slowing gold imports to help narrow the trade deficit and support the Indian rupee — which has been one of the worst-performing currencies in Asia so far this year.
Reuters survey: Oil price shocks hit Asian currencies, with bearish bets on the Indonesian rupiah reaching a three-and-a-half-year high.
According to a Reuters survey, bearish bets on the Indian rupee, Indonesian rupiah, and Philippine peso have increased as volatile oil prices put pressure on Asian currencies, intensifying market concerns over inflation, external balances, and economic growth. The bi-weekly survey of 10 analysts, foreign exchange strategists, and economists showed that bearish bets on the Indonesian rupiah rose to their highest level since October 2022, while bearish positions on the Thai baht, Philippine peso, and Indian rupee also climbed. Analysts at Mitsubishi UFJ Financial Group noted in a report: "The Philippine peso and Thai baht will remain vulnerable due to their high correlation with oil prices."
Express News | A Reuters survey showed that short positions on the Indian rupee and Philippine peso increased slightly.
Express News | MUFG: Asian currencies may currently be in a weak position.
Michael Wan, senior foreign exchange analyst at MUFG, stated in a research report that Asian currencies, particularly those of energy-importing countries such as the Indian rupee, Philippine peso, and Thai baht, may currently be in a weak position. The likelihood of a meaningful recovery in traffic through the Strait of Hormuz now appears much lower. President Trump announced a blockade of the Strait of Hormuz over the weekend. A more prolonged conflict now seems more likely, increasing the cost of Trump's war.
Indian Central Bank Holds Rates as Mideast War Keeps Outlook in Flux
India's central bank kept its policy rate steady in a widely expected decision as policymakers around the world gauge how to react to the rapidly evolving war in the Middle East.
Express News | Traders said that the Reserve Bank of India tightened onshore position limits, triggering an appreciation of the Indian rupee.
Indian refiners are reportedly seeking alternative currencies such as the renminbi and Hong Kong dollar for purchasing Russian oil.
Bloomberg reported, citing sources, that as geopolitical tensions escalate and U.S. policies shift, Indian refiners are increasingly using other currencies to purchase Russian oil in an effort to reduce reliance on the U.S. dollar. According to reports, the latest transaction method involves depositing Indian rupees into special bank accounts opened by Russian sellers overseas, which are then converted into UAE dirhams or Chinese yuan. Although the U.S. allowed India to purchase Russian oil earlier this month, the exemption is set to expire on April 11. Before this deadline, some Russian oil companies are seeking more permanent arrangements and prefer payments in alternative currencies to mitigate the impact of potential U.S. policy changes.
Highest premium of $8! Iran's oil price exceeds Brent crude as India scrambles to secure supplies.
The United States issued a 30-day sanctions waiver on Iranian oil, prompting India to resume purchases after a seven-year hiatus. Iranian oil is priced at a premium of $6-8 per barrel over Brent crude and supports settlement in either US dollars or even Indian rupees.
India's foreign exchange reserves drop to a three-year low as analysts urge the central bank to reduce forex interventions.
Gelonghui, March 18 | Recent measures by the Reserve Bank of India to protect the rupee's exchange rate are putting pressure on the country's foreign exchange reserves, prompting some analysts to argue that future interventions should be scaled back. India’s foreign exchange reserves (excluding gold) currently suffice to cover only 8.7 months of imports, the lowest level in three years. This comes at a time when India is facing rising import bills due to higher energy prices, impacting both its economy and markets. Indranil Pan, Chief Economist at Yes Bank, stated that the more the central bank intervenes, the less ammunition it has left. If the ongoing crisis in the Middle East escalates, this could trigger further challenges.