2025-05-30 10:32

MUMBAI, May 30 (Reuters) - The Indian rupee declined by about 1% in May, reversing course after gaining in the previous two months, influenced by factors such as continued uncertainty over U.S. trade policies, gains in its Asian peers and a conflict between India and Pakistan. The rupee closed at 85.5775 on Friday, capping a day of choppy trading with a mild decline. Sign up here. The currency had rallied to a six-month high earlier in May but shed its gains through the month. Initially, a military conflict between India and Pakistan hurt the currency but it rebounded once a ceasefire was reached. Over the rest of the month, dollar demand from corporates and foreign banks weighed on the rupee, traders said. Dollar-buying intervention by Reserve Bank of India also put a lid on the sharp appreciation above the 84.60-84.80 zone, according to one of the traders. Meanwhile, the dollar was set to end the month little changed against major peers as mild relief on the softening of U.S. trade policies, typified by the pact with China, gave way to a legal back-and-forth on the legal validity of reciprocal tariffs. Asian currencies were mostly stronger on the month, led by the Korean won while the offshore Chinese yuan, a closely tracked peer of the rupee, rose nearly 1%. Barclays expects the rupee to underperform its peers going forward as the RBI focuses on replenishing FX reserves and is "unlikely to want to see a renewed richening of the INR," analysts at the firm said in a note earlier this week. India's foreign exchange reserves (INFXR=ECI) , opens new tab stood at $685.7 billion as of May 16, about $19 billion below their all-time high hit in September 2024. Traders now await the release of India's economic growth data for the January-March quarter and U.S. PCE inflation data due later in the day. Economists polled by Reuters expect India's GDP to have grown 6.7% year-on-year, up from 6.2% in the previous three months. https://www.reuters.com/world/india/rupee-flips-back-monthly-decline-lags-asian-peers-2025-05-30/

2025-05-30 10:16

MUMBAI, May 30 (Reuters) - The Indian rupee gained on Friday, as uncertainty around U.S. tariffs following a temporary reinstatement pulled the dollar index back below the 100-handle. The dollar index had risen to a peak of 100.48 on Thursday after a trade court blocked most of U.S. President Donald Trump's tariffs, but quickly reversed course to fall 0.6% after an appeals court temporarily reinstated the levies as it considered the government's appeal. Sign up here. The rupee , aided by broad weakness in the dollar, rose 0.2% to 85.35 as of 10:40 a.m. IST, nearly the same level it was at before the initial block on the tariffs. The weakness in the dollar also reflected weaker-than-expected labour market data and U.S. consumption data, MUFG Bank said in a note. In the near-term, focus is likely to stay on developments on U.S. trade policies, especially as the end of the 90-day pause on country-specific reciprocal tariffs, starting April 9, draws near. "Our expectation for a trade deal to be struck between India and U.S. beyond the day-to-day uncertainty is a factor underpinning our view for USD/INR to grind lower to 83.50 by 1Q2026, coupled with lower inflation and more supportive domestic policies including rate cuts by RBI," MUFG said. Traders also pointed to dollar selling interest from at least two foreign banks, likely on behalf of custodial clients, which helped lift the rupee. Other Asian currencies were trading flat-to-slightly lower, while India's benchmark equity index, the Nifty 50 (.NSEI) , opens new tab, fell about 0.3%, tracking a fall in most regional equities. https://www.reuters.com/world/india/rupee-gains-dollar-index-reverses-course-us-tariff-twist-2025-05-30/

2025-05-30 09:51

Bank customers may not be fully aware of crypto-asset risks Stablecoins not good payment means without proper regulation Rules alone are not the solution, we need the digital euro ROME, May 30 (Reuters) - European Central Bank policymaker and Bank of Italy Governor Fabio Panetta called on Friday for close monitoring of the reputational risks banks face in providing crypto-asset services, warning that losses could harm the trust of customers. Presenting the Bank of Italy's annual report, Panetta warned about the growing links between the world of crypto-assets and the traditional financial system, pointing to the rising number of accords between banks and digital asset providers. Sign up here. "Crypto-asset holders might not fully understand their nature and conflate them with traditional banking products, with potentially negative repercussions for confidence in the credit system should losses occur," Panetta said. Italy's biggest bank Intesa Sanpaolo (ISP.MI) , opens new tab in January carried out what CEO Carlo Messina described as "a test", by buying 1 million euros in bitcoins, the world's largest digital currency. Intesa set up a proprietary trading desk for digital assets in 2023, and last year started handling spot trades with crypto-assets. Spain's Santander (SAN.MC) , opens new tab is weighing a digital asset expansion, including early-stage plans to offer a stablecoin as well as access to cryptocurrencies for retail customers of its digital bank, Bloomberg reported on Thursday. Panetta said stablecoins, which are designed to maintain a stable value against underlying currencies or assets, posed a threat to traditional means of payments if large foreign-based technology platforms decided to promote their use. "In the absence of adequate regulation, their suitability as a means of payment is doubtful, to say the least," he said. The central banker warned, however, that it would be foolish to think that the spread of crypto-assets, including stablecoins, can be curbed simply by imposing restrictions. "What is needed is a response that matches the ongoing technological transformation," he said, adding that "the digital euro project stems precisely from this need." The European Central Bank is working to develop a digital currency to compete with private alternatives that risk undermining the role of central bank money. https://www.reuters.com/business/finance/ecbs-panetta-warns-crypto-losses-can-harm-confidence-banks-2025-05-30/

2025-05-30 08:03

Yield at auction beats expectations, signaling investor caution Argentina's reserves target with IMF seen as challenging NEW YORK/BUENOS AIRES, May 30 (Reuters) - Argentina's first major bond sale in seven years, a $1 billion offering with payments in pesos, is a clear sign that global investors are regaining their faith in a country recently mired in triple-digit inflation. But the nearly 30% yield, higher than many expected, showed a high level of apprehension remains. Sign up here. President Javier Milei needs to prove to Argentines voting in October, the International Monetary Fund and foreign investors that the economic recovery will continue. Annual inflation has fallen to near 50% from over 270% a year ago. He has convinced the IMF to lend Argentina $20 billion and slashed government spending without losing much popularity, even though nearly 40% of Argentines live below the poverty line. Argentina owes around $300 billion, about $60 billion of which is in dollar-denominated international bonds. A return to dollar-denominated financing in global capital markets is embedded in the IMF program and is sorely needed to cement the recent recovery. This week's offering is "an important milestone on the path to refinancing future dollar commitments," said economist Gustavo Ber, head of Buenos Aires-based Estudio Ber. BTG Pactual called it a "savvy move" with the same outcome as the central bank buying dollars with pesos, without distorting the foreign currency market. The government said late on Wednesday that demand for the 5-year notes was about 1.7 times the $1 billion cap. The 29.5% yield exceeded initial expectations for about 25% and investors have the option to sell back the bonds after two years. Markets on Thursday signaled partial support, when prices for Argentina's dollar bonds issued under foreign or local laws rose marginally. Auctions like this could be replicated but other steps are crucial, said Armando Armenta, senior economist at AllianceBernstein. "It would be better to see more foreign direct inflows and, more importantly, the central bank purchasing reserves to meet the net international reserve accumulation targets," Armenta said. "This would open the door for Argentina to access the dollar sovereign debt market early next year." PESO DEBT On Thursday, peso-denominated debt prices fell and the 10-year local note yield rose, roughly to 27% from 26%. "These rates in pesos are very high, considering their expectations of inflation falling towards 10% in the next two years," said Clyde Wardle, senior emerging markets FX strategist at HSBC, of the yield paid this week. If the current 47% inflation keeps falling sharply, those rates will turn out to be very high and raise the risk of pushing the government to print pesos to pay bondholders, he said. The new offering's yield was well above the expectations of local brokerage Puente, which noted that it "does not indicate strong conviction regarding the future evolution and sustainability of the (currency exchange)." The peso has fallen about 9% to the dollar since capital controls were loosened in mid-April. Argentina has promised the IMF to add $4.4 billion to its net reserves by mid-June. Those reserves were in the red in December and analysts doubt the June objective will be met. The new bond shows investor limits for now, HSBC's Wardle said. "It is unlikely Argentina could find an affordable dollar-denominated issuance rate that attracts foreign investor interest. There is still too much uncertainty about growth." https://www.reuters.com/world/americas/argentina-takes-baby-step-toward-financial-order-with-pricey-1-billion-debt-2025-05-30/

2025-05-30 07:23

May 30 (Reuters) - European shares dipped on Friday as caution prevailed after a U.S. court reinstated President Donald Trump's tariffs, even as the benchmark index neared a robust monthly gain. The continent-wide STOXX 600 index (.STOXX) , opens new tab was down 0.1%, as of 0711 GMT, pressured by a temporary reinstatement of the most sweeping of Trump's tariffs a day after another court ordered an immediate block on them. Sign up here. However, the benchmark index was set for its first monthly advance in three, up 3.8% so far, capitalising on easing trade tensions and the recent U.S. fiscal concerns that forced investors to move away from American assets. On Friday, data showed German retail sales fell by 1.1% in April compared with the previous month. Investors also looked ahead to Germany's May inflation figures, to be released later in the day, that could offer more clues about the European Central Bank's policy decision next week. Among sectors, basic resources (.SXPP) , opens new tab was the biggest drag and fell 0.9%, dragged by lower copper prices. The real estate (.SX86P) , opens new tab supported the main index by rising 0.8%. M&G (MNG.L) , opens new tab jumped 8.2% after it said Japanese life insurer Dai-Ichi Life Holdings (8750.T) , opens new tab will take a 15% stake in the British insurer and asset manager as part of a strategic deal. https://www.reuters.com/markets/europe/stoxx-600-edges-down-us-trade-uncertainties-set-monthly-gains-2025-05-30/

2025-05-30 07:17

NEW DELHIMay 30 (Reuters) - India has agreed to exempt Saudi Arabia's sovereign wealth fund from a set of foreign portfolio investment rules to attract capital flows and strengthen financial ties between the two nations, two sources said. The rules, which club investments through various sovereign entities together and cap it at 10% in a single company, have prevented different subsidiaries of the Public Investment Fund from investing more in India, they said. Sign up here. Indian Prime Minister Narendra Modi visited the Gulf nation in April, when both the countries agreed to promote investment in areas including energy, infrastructure and pharmaceuticals. India is also negotiating a bilateral investment treaty with Saudi Arabia. The requirement to club investment from different sovereign entities together limits the ability of the Saudi fund and its subsidiaries to invest independently, the first source said, declining to be identified as they were not authorised to speak to the media. The exemption granted to the fund will allow its various arms to invest separately, enhancing their flexibility in deploying capital into Indian equity markets without breaching regulatory thresholds, he said. The Finance Ministry and the Saudi fund did not respond to requests for comment. The Public Investment Fund is one of the largest sovereign wealth funds globally with assets of about $925 billion under management. Its current exposure in India remains limited to $1.5 billion in Jio Platforms , opens new tab and $1.3 billion in Reliance Retail , opens new tab, according to its website. India, the world's third-largest oil importer, is looking to draw long-term capital from energy-rich Gulf nations, while Saudi Arabia is seeking to expand its investments in fast-growing economies as part of its Vision 2030 diversification strategy. To achieve these goals, both the nations formed a high-level task force in 2024 to expedite Riyadh's plan to invest $100 billion in India. "The progress made by this Task Force in areas such as taxation was also a major breakthrough for greater cooperation in the future," a joint statement , opens new tab said in April. "The two sides affirmed their desire to complete negotiations on the BIT at the earliest." Recent media reports , opens new tab indicated the government is also exploring tax relief measures for the Public Investment Fund to support India's infrastructure and energy sectors. https://www.reuters.com/world/india/india-exempt-saudi-fund-foreign-portfolio-investment-rules-sources-say-2025-05-30/