INR is trading further weaker today

Tokyo's core consumer inflation (ex food) rose more than anticipated to 2.7% (ext: 2.5%) in Oct'23 ahead of BoJ's rate decision scheduled next week.

Tokyo’s core consumer inflation (ex food) rose more than anticipated to 2.7% (ext: 2.5%) in Oct’23 ahead of BoJ’s rate decision scheduled next week.

Jahnavi Prabhakar,

Economist,

Bank of Baroda 

Mumbai, 27 October, 2023:  ECB kept interest rate on hold, breaking the streak of rate hikes that began in Jul’22. It noted that current level is enough to cool down inflation if the rates are maintained for ‘sufficiently long time’. It also stated the past rate hikes continue to be ‘transmitted forcefully into financial conditions’. ECB reiterated that they will continue with PEPP till the end of next year and will add another US$ 1.79tn and warned that the economy remains weak. On the other hand, US economy accelerated as its fastest pace in over 2-years to grow at 4.9% in Q3 with personal spending being the main growth driver. Separately, China’s industrial profits dropped by 9% for the period between Jan-Sep’23 compared with 11.7% in Jan-Aug’23 period. Tokyo’s core consumer inflation (ex food) rose more than anticipated to 2.7% (ext: 2.5%) in Oct’23 ahead of BoJ’s rate decision scheduled next week.

•  Barring Shanghai Comp, other global indices ended in red as investors monitored mixed economic data from US and ECB kept rates on hold for the first time. In US, technology and related stocks declined the most on the back of the disappointing results. Sensex too ended in red led by losses in oil & gas and metal stocks. However, it is trading higher today in line with other Asian stocks.
•  Global currencies closed mixed. DXY rose by 0.1% after better than expected GDP print. EUR closed flat after ECB’s decision. JPY fell further even as the government kept a close eye on the forex market. INR depreciated by 0.1% amidst losses in domestic equities. It is trading further weaker today, while other Asian currencies are trading higher.
•  Global yields ended mixed. US 10Y yield fell by 11bps tracking macro data. While GDP growth accelerated, inflation as measured by PCE eased. Jobless claims too rose more than expected. Japan’s 10Y yield rose by 2bps to a ~10-year high, inching closer to BoJ’s recently revised 1% cap. India’s 10Y yield rose by 3bps, but is trading at 7.35% today ahead of weekly auction.

(The views expressed in this research note are personal views of the author(s) and do not necessarily reflect the views of Bank of Baroda. Nothing contained in this publication shall constitute or be deemed to constitute an offer to sell/ purchase or as an invitation or solicitation to do so for any securities of any entity.)