Highlights:
Global Currency Highlights:
- Dollar weakens on receding expectation of a Fed hike beyond July.
- More rate hikes by ECB and BOE could support EUR and GBP gains.
- UK terminal rate seen at 6% from 6.25%, following latest inflation data.
- Weak dollar, lower US yields stem JPY decline despite BOJ policy stance.
Indian Rupee Highlights:
- RBI intervention and capital flows supported INR over the last month.
- In REER terms, INR remains undervalued by nearly 4% from its 5-year average.
- FX Reserves rose by USD 1.23 billion to USD 596 billion in the week ended July 7.
- RBI net forward dollar book declined for the second month to USD 19.3 billion in May.
- Forward premia rates edged lower amidst narrowing India-US 10yr yield differential.
- We foresee rupee at 81-83 levels by end-FY24.
