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Pricing distortions stemming from the Indian central bank’s recent foreign exchange curbs have opened up arbitrage between exchange-traded rupee futures and onshore forwards. However, bankers are wary of taking positions amid heightened regulatory risks, four market participants said.The recent spate of measures, including limits on net open FX positions of banks in the deliverable rupee market, has led to a reversal of chunky arbitrage banks, unleashing heavy dollar selling in the onshore forward market and pushing dollar/rupee forward rates lower.The exchange‑traded dollar-rupee futures have not fallen to the same extent, opening up an arbitrage window.The April maturity dollar-rupee future last…
Rabobank’s Senior Market Strategist Benjamin Picton highlights escalating geopolitical risks around Iran, the Strait of Hormuz and NATO fractures, with direct implications for Oil. He notes infrastructure damage to petrochemical assets, sharply higher WTI and Brent prices, and warns that prolonged closure of the Strait and further US strikes on Iranian infrastructure could prevent a rapid recovery in global Oil supply and demand.War escalation keeps crude markets tense”Infrastructure damage is mounting. Israel recently struck Iranian petrochemical infrastructure at the South Pars gas field. Iran retaliated by launching ballistic missile strikes against Saudi Arabia’s Al-Jubail industrial city – the world’s largest…
Gold (XAU/USD) remains on the back foot during the Asian session on Tuesday, though it lacks follow-through selling and trades in the previous day’s broader range. Hopes for a last-minute agreement between the US and Iran are fading ahead of President Donald Trump’s Tuesday evening deadline to reopen the Strait of Hormuz. This benefits the US Dollar’s (USD) global reserve currency status and exerts some pressure on the commodity. Apart from this, expectations for higher interest rates globally turn out to be another factor undermining the non-yielding yellow metal.Investors now seem convinced that the war-driven surge in energy prices would…
Mumbai | Kolkata: The central bank is seeking to rein in rupee volatility through enhanced oversight of foreign-exchange markets and by tightening norms governing banks’ participation in the non-deliverable forward (NDF) segment after the currency lost nearly 10% against the dollar in FY26, market participants said. For years, movements in the domestic currency market closely tracked price action in the offshore NDF market-an area over which the Reserve Bank of India (RBI) has little direct control. This influence became so pronounced that the central bank, despite not formally acknowledging the NDF market for decades, eventually began taking positions there to…
Mumbai: The rupee marginally climbed Monday after a session of range-bound trading in which dollar sales through unwinding of arbitrage positions by lenders ahead of the regulator-set April 10 deadline was met with demand for the US currency from importers and oil companies. The rupee ended Monday at 93.06/$, versus its Thursday close of 93.10/$. The rupee traded in the 92.80/$ to 93.10/$ range Monday amid unwinding of arbitrage trades by banks. “At these levels, dollar demand surged after oil companies and importers bought the greenback to hedge and make payments,” said Anil Bhansali, head of treasury at Finrex Treasury…
US President Donald Trump said that the latest proposal for a US ceasefire with Iran is “not good enough,” ahead of his deadline for Iran to either reopen the Strait of Hormuz or face major attacks on its civilian infrastructure, CNBC reported on Monday.During a press conference at the White House, Trump reiterated his threats to attack Iran’s energy and transportation infrastructure Tuesday at 8 p.m. ET if the strait is not reopened.Iran rejected the proposal and called for a permanent end to the war, according to Iranian state-run media.The spokesperson for Iran’s top joint military command has called Trump’s threats “delusional,” adding that…
Donald Trump, United States (US) President, said that he is very upset that guns were supposed to go to protesters, but were kept by a certain group. He added that they’re going to pay a big price for that at a speech in Washington on Monday.Key takeaways:Guns were supposed to go to protesters but a certain group of people kept them.Am very upset, they are going to pay a big price for that.They have some missiles, drones left.They got a lucky shot.Hopefully it will be over with quickly.We could leave right now but I want to finish it up.” US…
The series of measures by RBI, especially the curbs on corporate activity, has helped boost the rupee with the currency trading around 93 per US dollar. Indian companies’ activity in the non-deliverable forwards (NDF) market surged to over $7 billion on March 30, around seven times the average, signalling a rush to capture arbitrage opportunities created by banks unwinding positions following regulatory curbs.The unwinding followed the Reserve Bank of India’s imposition of restrictions on lenders’ net onshore open FX positions, prompting a rush to lower positions aimed at benefitting from gaps between onshore and non-deliverable forwards.With banks selling dollars in…
BNY’s Head of Markets Macro Strategy Bob Savage notes the Japanese Yen continues to weaken with USD/JPY near 160 as JGB yields hit multi‑decade highs and the Bank of Japan (BoJ) maintains a hiking bias. Japan’s leadership is pushing for talks with Iran to secure energy supplies, while BoJ regional reports flag risks from Middle East tensions, including higher transport and energy costs and supply chain disruptions.Weak Yen, higher yields and energy”Bond yields remain a key focus, with Japan leading rates higher.””The yield on 10y Japanese government bonds rose 2.5bp to 2.41%, a 28-year high, while the 40y rose 7bp…
The Indian rupee closed nearly unchanged on Monday, wedged between dollar sales spurred by the unwinding of arbitrage positions and importers’ hedging demand amid swirling risks from the Iran war. The rupee closed at 93.06 against the dollar, after closing at 93.10 in the previous session on Thursday. The rupee had climbed nearly 2% Thursday, as it bounced back from a record low of 95.21 after the Reserve Bank of India doubled down on curbing speculation. The currency rose to a two-week high of 92.7925 in early trading on Monday, but shed much of it as importers stepped in to…