2025-01-02 10:13
MUMBAI, Jan 2 (Reuters) - The Indian rupee closed at its weakest closing level on record for the eighth consecutive session on Thursday, as a widened arbitrage between the non-deliverable and outright forwards market added to the currency's troubles. The rupee closed at 85.7525 against the U.S. dollar, down 0.1% on the day. While the rupee hit a low of 85.79 during the session, it avoided deeper losses on the back likely dollar-selling intervention by the Reserve Bank of India, traders said. While state-run banks were spotted offering dollars earlier in the session as well, traders said the offers were amplified near 85.78-85.79 levels. The RBI had intervened strongly near these levels last week as well when the rupee slumped to an all-time low of 85.8075. On the day, gains in most Asian currencies were of little help to the rupee in the face of heightened dollar demand driven by banks exploiting arbitrage opportunities between the NDF and onshore over-the-counter (OTC) markets. The widened gap between NDF and outright forwards also sparked a surge in dollar-rupee forward premiums with the 1-year implied yield touching its highest level since October 2022. The forward premiums retreated later in the session on the back of dollar-rupee buy/sell swaps conducted by state-run banks, likely on behalf of the RBI, traders said. Over the last month or so, the RBI has complemented its spot market interventions with buy/sell swaps to prevent an impact on rupee liquidity in the banking system and headline foreign exchange reserves. In the near term, the rupee is expected to trade between 85.30 and 85.80, said Amit Pabari, managing director at FX advisory firm CR Forex. Analysts expect the rupee to cling to a bearish bias in the near term as it faces global and domestic headwinds ranging from persistent dollar strength to concerns about India's slowing growth. Sign up here. https://www.reuters.com/markets/currencies/rupee-falls-all-time-closing-low-onshore-ndf-arbitrage-weighs-2025-01-02/
2025-01-02 09:54
LONDON, Jan 2 (Reuters) - British factory activity shrank at the fastest pace in 11 months in December and manufacturers cut staffing levels due to higher taxes and weak foreign demand, a survey showed on Thursday, the latest in a string of weak readings on the economy. The S&P Global UK Manufacturing Purchasing Managers' Index sank to 47.0 from 48.0 in November and was below a preliminary reading for December of 47.3. Rob Dobson, a director at S&P Global Market Intelligence, pointed to a stalling domestic economy, weak export sales and concerns about future cost increases including from higher taxes on business announced by finance minister Rachel Reeves. The survey's measure of staffing hit its lowest since February as firms faced rising cost pressures from higher transportation and raw material costs as well as from the social security increase for employers which will start in April. "With costs expected to rise again in early 2025 as the announced budget changes come into effect, the Bank of England is likely to remain cautious about further interest rate cuts, despite rising signs of economic difficulties," Dobson said. The BoE has said it will move only gradually with further cuts to borrowing costs as it waits to see whether Reeves' budget adds to inflation pressures. Weak economic growth outside Britain pushed exports into their sharpest fall in 10 months and overall new orders fell by the most since October 2023, the PMI found. Britain's economy lost its momentum around the time of the July election which brought Labour into power with some employers blaming the new government's downbeat message about the outlook and then its tax increase announcement. Data published on Dec. 23 showed the economy did not grow at all in the three months after the election. The BoE has estimated no growth in the fourth quarter either, prompting the opposition Conservative Party to warn of a risk of recession. The preliminary December PMI in Britain's dominant services sector showed a slight overall improvement, but employment across both sectors contracted by the most since January 2021. The final services PMI for last month is due to be published on Monday. Sign up here. https://www.reuters.com/world/uk/uk-factories-report-sharpest-contraction-nearly-year-pmi-shows-2025-01-02/
2025-01-02 09:00
JOHANNESBURG, Jan 2 (Reuters) - South Africa's rand started the new year on a positive note on Thursday after a volatile end to 2024. At 0803 GMT, the rand traded at 18.7625 against the dollar , about 0.6% stronger than its previous close. Like most emerging market currencies, trade in the rand was turbulent in November and December after Donald Trump was elected U.S. president, amid uncertainty over his promised tariffs and other policies and a more hawkish Federal Reserve outlook. "The short-term outlook for the local currency remains negative as international factors and the strength of the Dollar weigh," Andre Cilliers, currency strategist at TreasuryONE, wrote in a note. On the stock market, the Top-40 (.JTOPI) , opens new tab index was up about 1%. South Africa's benchmark 2030 government bond was marginally stronger, with the yield down 1 basis point to 9.04%. Sign up here. https://www.reuters.com/world/africa/south-african-rand-starts-2025-front-foot-2025-01-02/
2025-01-02 08:23
BEIJING, Jan 2 (Reuters) - China has added 28 U.S. entities to its export control list to "safeguard national security and interests", the commerce ministry said on Thursday. The companies on the list include General Dynamics (GD.N) , opens new tab, Boeing Defense, Space & Security, Lockheed Martin(LMT.N) , opens new tab and Raytheon Missiles & Defense. China is also banning the export of dual-use items to these companies starting on Thursday, the ministry said. Sign up here. https://www.reuters.com/business/aerospace-defense/china-adds-28-us-entities-export-control-list-2025-01-02/
2025-01-02 07:44
KAMPALA, Jan 2 (Reuters) - The Ugandan shilling was weaker on Thursday compared to the previous session, undercut by a surge in demand for hard currency from the interbank market, traders said. At 0719 GMT commercial banks quoted the shilling at 3,680/3,690, compared to Tuesday's close of 3,674/3,684. Sign up here. https://www.reuters.com/markets/currencies/ugandan-shilling-weaker-banks-hard-currency-demand-2025-01-02/
2025-01-02 07:41
MUMBAI, Jan 2 (Reuters) - The heavy demand for the U.S. dollar in the non-deliverable forward (NDF) market had widened the arbitrage with the Indian onshore market, putting more strain on the rupee and sending it just shy of another lifetime low, traders said on Thursday. The rupee declined to 85.7900 per U.S. dollar, not far off the all-time low of 85.8075 hit last Friday. It opened on a weaker note, at 85.7025, and has been under pressure since. The rupee hit record lows regularly in December due to the run-up in the dollar index and U.S. Treasuries. The dip in India's growth rate, a wider trade deficit and a slowdown in capital inflows have compounded its woes. Amid this, speculators have been lapping up the dollar in the NDF market vis-à-vis the rupee, which has spurred arbitrage opportunities with the onshore over-the-counter (OTC) markets. For instance, the one-month dollar/rupee NDF rate on Thursday was 4-6 paisa higher than the onshore OTC rate, per traders. "It's not only the 1-month, there is good arbitrage across maturities," said the head of FX and rates trading at a private sector bank, while pointing out that the difference between the two rates had widened on Thursday. "With the New Year kicking off, it would seem new money is going to work (in the NDF market)." To exploit the arbitrage, market participants buy dollar/rupee in the onshore OTC -- which raises the pair's value in that market -- and sell it in the NDF market. "Unless we see a major change in the outlook of the dollar, you can't expect NDF to let up" and the rupee will "labour", a currency trader at a bank said. The dollar index , hovering at its highest in more than two years, is currently well supported amid expectations that U.S. President Donald Trump will raise trade tariffs. Sign up here. https://www.reuters.com/markets/currencies/india-rupee-onshore-ndf-arbitrage-widens-new-all-time-low-sight-2025-01-02/
