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28 Jan 2014
Flash: Yen weakens as EM stabilises - BTMU
FXstreet.com (Barcelona) - Lee Hardman, FX Analyst at the Bank of Tokyo Mitsubishi UFJ notes that emerging market currencies have continued to stabilize in the Asian trading session, which has resulted in the yen weakening as it gives back some its recent safe haven driven gains.
Key Quotes
"The Central Bank of India’s unexpected decision overnight to raise its benchmark repurchase rate by 0.25 point to 8.00% and reverse repurchase rate by 0.25 point to 7.00% has further helped to support emerging market currencies."
"The RBI stated it will address inflation risks resolutely even as economic growth slows. Headline inflation is expected to remain elevated at above 9.0% in the year ahead. The RBI also noted that further near-term tightening is not anticipated."
"Real policy rates still remain in negative territory and will likely have to be raised further ahead even if the RBI proves correct in projecting that India’s current account deficit will total less than 2.5% of GDP in FY14. The rupee has strengthened modestly overnight following RBI monetary tightening which should help USD/INR to continue trading within a narrow range for now between the 60 and 64 levels as it has done since mid-September."
Key Quotes
"The Central Bank of India’s unexpected decision overnight to raise its benchmark repurchase rate by 0.25 point to 8.00% and reverse repurchase rate by 0.25 point to 7.00% has further helped to support emerging market currencies."
"The RBI stated it will address inflation risks resolutely even as economic growth slows. Headline inflation is expected to remain elevated at above 9.0% in the year ahead. The RBI also noted that further near-term tightening is not anticipated."
"Real policy rates still remain in negative territory and will likely have to be raised further ahead even if the RBI proves correct in projecting that India’s current account deficit will total less than 2.5% of GDP in FY14. The rupee has strengthened modestly overnight following RBI monetary tightening which should help USD/INR to continue trading within a narrow range for now between the 60 and 64 levels as it has done since mid-September."