- Banking
- Wealth
- Privileges
- NRI Banking
- Treasures Private Client
Related Insights
Minutes from the April rate review carried two takeaways; first, a majority of the monetary policy committee (MPC) is confident on the growth outlook and while disinflation is ongoing, concerns have zeroed in on the sticky food component. Secondly, two off the three external members (one of whom dissented) are concerned over the growth sacrifice from restrictive real rates. The forward-looking 12M real rate gauge stands at ~2%, higher than the preferred 1.0-1.5%. Questioning this buffer, Deputy Governor had remarked earlier that the real rate assessment must also pass the smell test on how far the 12M inflation is vs the target, which, we add, at this juncture does not call for pre-emptive rate cuts. The MPC is likely to consider the vulnerability of the inflation outlook to supply-side shocks, with geopolitics adding to volatility. Encouragingly, inflationary expectations have eased. Increase in retail fuel prices (after a recent INR/litre cut last month) is not on the cards, with India’s state run refiners continuing to purchase crude oil from Russia despite a reduction in discounts, as the latter still adds value to refiners’ gross margin realisations (link).
Indian bond yields jumped in the past week tracking higher oil and hardening UST yields, with the 10Y yield at 7.20-7.23% on Monday. Foreign debt investors have trimmed exposure by $1.1bn MTD, displaying strong paying interest despite purchases by domestic names. Markets have also cut back on rate cut expectations, amidst heightened geopolitical risks, strong domestic growth momentum and delay in the US rate cut cycle. Given unfavourable external cues, interests into debt might be lukewarm until the index inclusion into global benchmarks formally kicks off in Jun24. Despite bond jitters, recent activity data has been encouraging. The Indian weather agency, IMD predicted an ‘above-normal’ rainfall in this year’s southwest monsoon, at 106% of the long-term average (LPA), marking the first since 2016. In the near-term, however, parts of the country are experiencing a strong heatwave. March goods and service trade data reinforced our expectations that Jan-Mar24 quarter is on course to post a current account (CA) surplus, taking the full year CA close to our forecast at -0.8% of GDP, narrowest since FY21. Like the debt markets, the rupee is being driven by global cues rather than domestic optimism, as the currency fell to a record low late last week. Despite the fall, the INR is nearly flat on the year, retaining its position as the regional best performer on year-to-date basis. On a separate note, the poll schedule kickstarted on Friday and will be conducted in phases till late May.
Topic
Explore more
E & S Macro StrategyThe information herein is published by DBS Bank Ltd and/or DBS Bank (Hong Kong) Limited (each and/or collectively, the “Company”). This report is intended for “Accredited Investors” and “Institutional Investors” (defined under the Financial Advisers Act and Securities and Futures Act of Singapore, and their subsidiary legislation), as well as “Professional Investors” (defined under the Securities and Futures Ordinance of Hong Kong) only. It is based on information obtained from sources believed to be reliable, but the Company does not make any representation or warranty, express or implied, as to its accuracy, completeness, timeliness or correctness for any particular purpose. Opinions expressed are subject to change without notice. This research is prepared for general circulation. Any recommendation contained herein does not have regard to the specific investment objectives, financial situation and the particular needs of any specific addressee. The information herein is published for the information of addressees only and is not to be taken in substitution for the exercise of judgement by addressees, who should obtain separate legal or financial advice. The Company, or any of its related companies or any individuals connected with the group accepts no liability for any direct, special, indirect, consequential, incidental damages or any other loss or damages of any kind arising from any use of the information herein (including any error, omission or misstatement herein, negligent or otherwise) or further communication thereof, even if the Company or any other person has been advised of the possibility thereof. The information herein is not to be construed as an offer or a solicitation of an offer to buy or sell any securities, futures, options or other financial instruments or to provide any investment advice or services. The Company and its associates, their directors, officers and/or employees may have positions or other interests in, and may effect transactions in securities mentioned herein and may also perform or seek to perform broking, investment banking and other banking or financial services for these companies. The information herein is not directed to, or intended for distribution to or use by, any person or entity that is a citizen or resident of or located in any locality, state, country, or other jurisdiction (including but not limited to citizens or residents of the United States of America) where such distribution, publication, availability or use would be contrary to law or regulation. The information is not an offer to sell or the solicitation of an offer to buy any security in any jurisdiction (including but not limited to the United States of America) where such an offer or solicitation would be contrary to law or regulation.
This report is distributed in Singapore by DBS Bank Ltd (Company Regn. No. 196800306E) which is Exempt Financial Advisers as defined in the Financial Advisers Act and regulated by the Monetary Authority of Singapore. DBS Bank Ltd may distribute reports produced by its respective foreign entities, affiliates or other foreign research houses pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Singapore recipients should contact DBS Bank Ltd at 65-6878-8888 for matters arising from, or in connection with the report.
DBS Bank Ltd., 12 Marina Boulevard, Marina Bay Financial Centre Tower 3, Singapore 018982. Tel: 65-6878-8888. Company Registration No. 196800306E.
DBS Bank Ltd., Hong Kong Branch, a company incorporated in Singapore with limited liability. 18th Floor, The Center, 99 Queen’s Road Central, Central, Hong Kong SAR.
DBS Bank (Hong Kong) Limited, a company incorporated in Hong Kong with limited liability. 13th Floor One Island East, 18 Westlands Road, Quarry Bay, Hong Kong SAR
Virtual currencies are highly speculative digital "virtual commodities", and are not currencies. It is not a financial product approved by the Taiwan Financial Supervisory Commission, and the safeguards of the existing investor protection regime does not apply. The prices of virtual currencies may fluctuate greatly, and the investment risk is high. Before engaging in such transactions, the investor should carefully assess the risks, and seek its own independent advice.