Highlights:
US Economy:
- US GDP grew 1.1% in Q1 2023 on account of robust consumer spending.
- Senior Loan Officer Opinion Survey showed banks tightened lending conditions in Q1 2023.
- Tighter lending conditions expected to curtail demand in the coming quarter.
- US Treasury cash balances plunge to USD 57.3 billion in the absence of debt ceiling revision.
- Hawkish European central banks narrowed the dollar’s rate advantage over EUR and GBP.
- Weakening pressure on USD expected in the coming months.
Domestic Economy:
- GST collections, e-way bills and PMIs continued to stay healthy in April.
- IIP recorded a dismal performance with growth of 1.1% y-o-y in March.
- Retail inflation moderated to an 18-month low of 4.7% in April.
- Core price pressures eased to 5.5% in April after staying sticky near 6%.
- Bank credit grew 15% in FY23 driven by the retail and services segment.
- Merchandise exports contracted for the 3rd month in a row in April.
- Services exports were upbeat recording healthy growth of 26% in April.
- India’s forex reserves rose to USD 600 billion, highest since June 2022.
- Rupee contained largely within 81-83 levels on two-way RBI FX intervention.
- Withdrawal of Rs 2000 notes could see an infusion of Rs 1-1.8 lakh crore of liquidity during Jun-Sept.
- We foresee INR and 10-year bond yield in the 81-83 and 7-7.2% range respectively, by end-FY24.
