2024-03-20 10:16

MUMBAI, March 20 (Reuters) - The Indian rupee fell to its lowest level in two months on Wednesday, pressured by dollar demand from importers, including oil companies, debt repayment outflows and weakness in most Asian peers, traders said. The rupee closed at 83.1575 against the U.S. dollar, weaker by 0.15%, compared with its previous close at 83.0350. The rupee touched an intraday low of 83.17, its weakest level since January 18. Sustained dollar demand from local oil companies and other importers led the rupee lower during the session, a foreign exchange trader at a private said. Meanwhile, the dollar-rupee overnight swap rate was also under pressure, signalling a potential crunch for cash dollars. The Reserve Bank of India's intervention to absorb dollar inflows has fuelled the shortage of dollars alongside corporate payment and equity related outflows, the trader added. The rupee has "reverted to its mean" and is unlikely to weaken significantly from current levels with 83.20-83.25 serving as a strong support, Sajal Gupta, head of forex and commodities at Nuvama Professional Clients Group's institutional desk, said. The dollar index was rose nearly 0.3% to 104.14, its highest level in nearly three weeks, while most Asian currencies fell. While the U.S. central bank is widely expected to keep rates unchanged later in the day, investors will keep a close eye on any changes to the Fed's interest rate projections and commentary from Chair Jerome Powell. The U.S. central bank's dot plot in December had indicated that policymakers expect three cuts of 25 basis points each over 2024. "The dollar still seems to be lagging the recent pick-up in US rates and even if the Fed did stick with three expected cuts this year, we doubt the dollar would sell off for long," ING Bank stated in a note. Keep up with the latest medical breakthroughs and healthcare trends with the Reuters Health Rounds newsletter. Sign up here. https://www.reuters.com/markets/currencies/rupee-falls-2-month-low-importer-dollar-demand-awaits-fed-decision-2024-03-20/

2024-03-20 10:04

A look at the day ahead in U.S. and global markets from Mike Dolan However the Federal Reserve spins it later, there's some relief in other G7 economies at least that the disinflation process hasn't completely stalled yet - offering some encouragement to badly bruised bond markets. As the Fed gets set to announce its latest policy decision and quarterly economic and rate projections on Wednesday, markets seem fairly comfortable with the state of play. After weeks of back and forth, futures are now priced for a first cut by July and 75 basis points of easing through the full year - with eyes on chair Jerome Powell's press briefing for any discussion on the Fed's balance sheet runoff and also on policymakers' "dot plot" on projected future rates. With the S&P500 (.SPX) , opens new tab eking out another record closing high on Tuesday, that's clearly not a terrible vista for stock investors at least. But ailing bond markets got a shot in the arm over the past 24 hours too - despite the Bank of Japan ending negative interest rates for the first time in 8 years and news of a punchy 11% surge in U.S. housing starts last month. The cheer came from the inflation updates from Britain and Canada, both of which came in below forecast for February and suggested the stickiness seen in equivalent in U.S. price readings so far this year may not be as pervasive as feared. Canada's inflation cooled to its slowest pace since June at 2.8% and closely-watched core inflation measures eased to more than two-year lows, prompting markets to up bets on a June rate cut there. Canada's dollar eased back afterwards. And there was good news too heading into Thursday's Bank of England policy meeting as data showed British inflation easing by more than economists and the BoE itself had expected, falling to a more than 2-year low at 3.4%. While a first BoE rate cut is fully priced in by its August 1 meeting, markets now see a 50% chance of a move as soon as June. Gilt yields and sterling fell after the news. There were other encouraging signs too. A downward revision to the Swiss government's 2024 inflation forecast to just 1.5% has spurred talk the Swiss National Bank could be the first to ease policy as soon as Thursday - knocking back the Swiss franc to its weakest level of the year so far. On the flipside of all the rate cut speculation was the BOJ's move to finally tighten its super-loose stance on Tuesday. But even though Tokyo markets were closed for a holiday, indications of continued BOJ bond buying pushed the yen through 151 per dollar to its weakest of the year. The upshot of all those moves is the dollar's index (.DXY) , opens new tab is at its highest in almost three weeks going into the Fed decision. And aided by good demand at Tuesday's 20-year Treasury bond auction, the global picture has allowed Treasury yields to fall back a bit too. Wall St stock futures held steady overnight near the new highs. China's stocks edged higher after the People's Bank of China left benchmark lending rates unchanged at a monthly fixing, in line with market expectations. In company news, Nvidia's shares (NVDA.O) , opens new tab nudged higher after the chipmaker said its new flagship AI processor is expected to ship later this year and CEO Jensen Huang said he is chasing a data center market potentially greater than $250 billion. AI server maker Super Micro Computer (SMCI.O) , opens new tab shares tumbled almost 9% on Tuesday, however, after it announced it will sell 2 million shares that could fetch about $2 billion. Micron Technology reports earnings later on Wednesday. In Europe, stocks edged lower on a blow to the luxury sector there as Kering (PRTP.PA) , opens new tab shares tumbled 14.8% - and on course for its biggest one-day loss on record - after the French luxury goods group warned its first-quarter sales at its star label Gucci could drop by around 20% due to weakness in Chinese demand. Key diary items that may provide direction to U.S. markets later on Wednesday: * U.S. Federal Reserve's policy decision, quarterly projections and press conference * European Central Bank President Christine Lagarde, ECB chief economist Philip Lane and ECB board member Isabel Schnabel all speak in Frankfurt * U.S. corporate earnings: Micron Technology, General Mills Get a look at the day ahead in U.S. and global markets with the Morning Bid U.S. newsletter. Sign up here. https://www.reuters.com/markets/us/global-markets-view-usa-2024-03-20/

2024-03-20 09:53

SINGAPORE, March 20 (Reuters) - Japan's era of negative rates may be over, but some investors are convinced that low rates are not, meaning bets against the yen are back despite the Bank of Japan's first hike in 17 years. While the BOJ move at Tuesday's policy meeting marked a monumental shift, it stuck to its dovish tones and said it expects to maintain "accommodative financial conditions". That sent traders scurrying back into popular yen 'carry trades', driving an already battered yen yet lower. "Japan still remains the lowest interest rate among the G10," said Shafali Sachdev, head of investment services, Asia at BNP Paribas Wealth Management. "So, with event risk out of the way this is almost seen as an opportunity to re-enter carry positions." In a carry trade, an investor borrows in a currency with low interest rates and invests the proceeds in a higher-yielding currency. A 3-month dollar-yen carry trade can earn as much as 5% on an annualised basis. The rush to borrow yen for carry trades was clearly reflected in Wednesday's price action. The yen slid to its weakest in four months against the dollar , a 16-year low against the euro and its lowest level against sterling since 2015, extending its fall from the previous session. GAPING YIELDS Some of the yen's decline came on the back of a 'sell-the-fact' trade, given how BOJ Governor Kazuo Ueda, unlike his predecessor Haruhiko Kuroda who had a shock-and-awe approach, had prepared investors for a potential move. "What would have been quite seismic announcements historically were in the end quite muted, given what had already been leaked to the markets over the last few days," said Charles Hepworth, investment director at GAM Investments. Moreover, there is still a yawning gap between rates in Japan and those in other developed economies. The U.S. Federal Reserve's main policy rate stands at 5.25-5.5%, and those in other major economies also remain above 4%. That stark differential keeps the yen carry trades in favour, and in turn the currency under pressure. The currency has slid 16% against the dollar from a peak in January 2023. "The big pairs continue to be versus the dollar, versus the Aussie, versus the kiwi... These are more shorter-term trades where the carry is in your favour," said BNP Paribas' Sachdev. And with volatility relatively low and the Fed unlikely to commence its rate easing cycle anytime soon, it is easy to see why investors are eager to amass yen-financed positions. Three-month dollar/yen implied volatility , a measure of the cost of options contracts that traders use to hedge positions, is near its lowest level in about three months. Market expectations for a first Fed cut in June have also been scaled back after a run of data pointing to still-sticky inflation in the world's largest economy. "Any time the Fed and the BOJ are moving policy settings at about the same time, it's always the Fed that rules and dominates the price action," said Gareth Berry, FX and rates strategist at Macquarie Group. HSBC analysts think yen selling will eventually abate, around when the Fed starts cutting rates. If the dollar falls and the yen appreciates, then the yield on yen carry trades will be eroded. But for now, even a landmark policy pivot from the BOJ has not been able to turn the tide in the yen's favour. Keep up with the latest medical breakthroughs and healthcare trends with the Reuters Health Rounds newsletter. Sign up here. https://www.reuters.com/markets/currencies/yen-carry-trade-tempts-sellers-despite-boj-rate-hike-2024-03-20/

2024-03-20 09:48

COPENHAGEN, March 20 (Reuters) - The Danish central bank on Wednesday almost doubled its forecast for economic growth this year due to strong production by drug maker Novo Nordisk (NOVOb.CO) , opens new tab and the restart of natural gas production in the North Sea. The central bank expects GDP to increase by 2.4% this year and 1.4% next year, up from a previous forecast of 1.3% for both years. The higher growth projection was partly due to the increase in production abroad by Danish pharmaceutical companies and the restart this month of Denmark's Tyra gas field, which was shut for redevelopment in 2019, the central bank said. "Without these two factors, we estimate that the Danish economy will grow at a more subdued rate of 0.8% this year," Governor Christian Kettel Thomsen said in a statement. Novo Nordisk makes in-demand weight loss and diabetes drugs under the brand names Wegovy and Ozempic and the bank said its production abroad is included in Denmark's GDP even though many of the jobs are located outside the country. The pharmaceutical giant's market valuation recently surpassed both Tesla and Visa, making it the world's 12th most valuable company. Core inflation, which does not include the prices of energy and non-processed food, is expected to be 2.3% in 2024, 2.8% in 2025 and 2.0% in 2026, the central bank said. Get a look at the day ahead in European and global markets with the Morning Bid Europe newsletter. Sign up here. https://www.reuters.com/markets/europe/danish-central-bank-raises-2024-gdp-forecast-novo-nordisk-gas-field-restart-2024-03-20/

2024-03-20 09:05

WASHINGTON, March 20 (Reuters) - The Biden administration said it is awarding Intel (INTC.O) , opens new tab nearly $20 billion in grants and loans on Wednesday, supercharging the company's domestic semiconductor chip output and marking the government's largest outlay to subsidize leading-edge chip production. Biden will announce the preliminary agreement for $8.5 billion in grants and up to $11 billion in loans for Intel in Arizona, with some of the funding to be used to build two new factories and modernize an existing one. Commerce Department Secretary Gina Raimondo called it a "huge deal" and one of the largest investments ever in U.S. semiconductor manufacturing. "It means leading-edge semiconductors made in the United States of America," she said on Tuesday, noting that the country's share of leading-edge chip production is now at zero but may rise to 20% by 2030 thanks in part to the subsidy program. The goal is to reduce reliance on China and Taiwan, as the share of global semiconductor manufacturing capacity in the U.S. has fallen from 37% in 1990 to 12% in 2020, according to the Semiconductor Industry Association. Reuters first reported news of the trip to Arizona, a critical political swing state that Biden, who narrowly won the state in 2020, hopes to win in November in his matchup against Republican former President Donald Trump. The historic outlay shows the Biden administration is betting big on Intel as part of the 2022 CHIPS and Science Act, a bid to boost domestic semiconductor output with $52.7 billion in funding, including $39 billion in subsidies for semiconductor production and $11 billion for research and development. Commerce is dedicating $28 billion for government subsidies for chips manufacturing - although it has more than $70 billion in requests - and also has $75 billion in lending authority. The announcement in Arizona could also help Democrats defend a critical U.S. Senate seat in the November elections and possibly provide a boost in a pair of competitive House of Representative races. Arizona was a point of pride for Biden’s 2020 campaign, which flipped the southwestern state , opens new tab for the first time in six presidential elections, but his aides see delivering a repeat victory as a tall order. It is also welcome news for Intel, which in January forecast first-quarter revenue could miss market estimates by more than $2 billion, as it grapples with uncertain demand for its chips used in the traditional server and personal computer markets. Last month, the Biden administration awarded $1.5 billion to GlobalFoundries (GFS.O) , opens new tab, the world's third-largest contract chipmaker, to build a semiconductor production facility in Malta, New York, and expand existing operations there and in Burlington, Vermont. In January, Commerce announced Microchip Technology (MCHP.O) , opens new tab would get $162 million in government grants, allowing the company to triple production of mature-node semiconductor chips and microcontroller units at two U.S. factories. Awards for South Korea's Samsung and Taiwan's TSMC are expected in the coming weeks. In addition to Intel's Arizona projects, the money will help fund Intel's delayed leading-edge factory construction project in Ohio, a nearly complete advanced packaging facility in New Mexico, and a research and development facility in Oregon. Officials declined to detail how much money would flow to each project. In addition to the funds slated to be announced on Wednesday, Intel is expected to receive as much as $3.5 billion from the Commerce Department to boost security at its Arizona facilities to produce sensitive chips for the military. The Technology Roundup newsletter brings the latest news and trends straight to your inbox. Sign up here. https://www.reuters.com/technology/intel-clinches-nearly-20-bln-awards-biden-boost-us-chip-output-2024-03-20/

2024-03-20 08:08

NEW DELHI, March 20 (Reuters) - Indian Prime Minister Narendra Modi has asked all ministries to propose annual goals for their departments for the next five years, according to a government document, underlining his confidence of winning a general election starting next month. The document listing the instructions from Modi to government bureaucrats, which was reviewed by Reuters, was sent earlier this month, just before the Election Commission announced dates for the voting. Opinion polls predict an easy win for him and his Bharatiya Janata Party (BJP), with the opposition led by the Congress party struggling to present a united front to take on Modi's immense popularity. The tenure of the new government will last five years. The March 11 document says Modi asked all departments to prepare five-year action plans as part of his goal to lift India to a fully developed country by 2047 from middle-income levels. A 100-day plan for the next government will flow from that, it said. The prime minister's office and spokespeople for the government did not respond to requests for comment. The thrust areas include agriculture and the rural economy, and employment and labour, according to the document. According to another government document from October and seen by Reuters, the plans on agriculture and the rural economy include developing cold chain logistics, infrastructure for organic farming and exports and collective large‐scale farming by 2030. It also calls for more private sector participation. The aim is to "transform the rural economy via an increase in agri productivity and employment diversification in non‐agri sectors", it said. One of the major failures of Modi's current term is his missed goal of doubling farm incomes by 2022. Farmers' groups recently hit the streets seeking guaranteed higher prices for their produce. On jobs, the target is to reduce unemployment to less than 5% from around 8%. In the March document, Modi has also asked officials to interact with industry bodies as well as consider adding themes on how India can become a developed country in the curriculum for schools and colleges. He has also ordered 100% school enrolment and vaccination for children, although the document does not give a clear timeline for that. India's current literacy rate is 77.75% and children immunisation is about 90%. "The country can move at a pace faster than we imagine," he was quoted as saying. "This vision is an example of coming out of silos." The Reuters Daily Briefing newsletter provides all the news you need to start your day. Sign up here. https://www.reuters.com/world/india/indias-modi-shows-confidence-about-elections-asks-ministries-5-year-goals-2024-03-20/