Blog for Stock tips, Equity tips, Commodity tips, Forex tips: Sharetipsinfo.com

http://sharetipsinfo.comJust get registered at Sharetipsinfo and earn positive returns

Wall Street brokerage Bank of America Securities has cut its March quarter growth forecast by 30 bps to 4 per cent, amid coronavirus pandemic-driven shutdowns and expects a cut in key benchmark rates on or before the April 3 monetary policy review. The brokerage expects the pandemic-driven lockdowns to run through mid-April, crippling economic activities across the value-chain.

The agency also pegged down FY20 growth forecast to 4.7 per cent and FY21 to 5.1 per cent, respectively, assuming a 2.2 per cent global growth.

But if the global economy falls into a recession, the domestic economy is likely to fall further to 4.4 per cent in FY21, it warned.

The brokerage has also lowered its forecast for the June quarter (first quarter of 2020-21) by a sharper 80 bps to 4 per cent citing the pandemic impact on economic activities even as the government is taking measures to contain the spread of the deadly virus that has killed close to 8,000 people globally.

Back home, the country has so far been comparatively secure but the government and health authorities are expecting an implosion of the pandemic in the country over the next week.

The pandemic has already taken the lives of three people in the country and left hundreds in home and hospital quarantines.

“We cut our real growth forecast by 30 bps to 4 per cent for the March quarter and by 80 bps to 4 per cent in the June quarter on rising Covid-19-related shutdowns,” BofA Securities said in a note on Wednesday.

Its India economists Indranil Sen Gupta and Aastha Gudwani said their India Activity Indicator continues to point to a long bottom.

While growth has improved to 4.3 per cent in January from 3.5 per cent in December 2019, it is still below the 4.4 per cent printed in October-November.

Four of the seven components have improved in January from December, they said and warned that "although we had called that the worst is over after the November dataprints, the Covid-19-related shutdowns will likely pull down activity further".

Expecting an inter-MPC meeting rate cut of 25 bps before or at the scheduled April 3 review, they forecast two more repo cuts of 25 bps each in June and October, and said this is needed as high real lending rate is exerting a drag on growth.

The brokerage also blamed the rising real lending rates as the main villain delaying the fragile recovery.

On the rate cuts, they expect RBI to cut rates by 25 bps before/on April 3 as the US Fed has done so by a whopping 150 bps. The RBI will likely cut again in June with inflation set to fall to its 2-6 per cent mandate and the March quarter growth coming down to 4 per cent.

An October rate cut is likely as base effects and weak demand is expected to drag inflation down to 2.5 per cent in the first half of FY21, the note said.

http://sharetipsinfo.comJust get registered at Sharetipsinfo and earn positive returns

 The safe-haven yen gained sharply, but the dollar held onto hefty overnight gains against other currencies on Wednesday, as fears over the coronavirus pandemic kept markets frazzled despite massive injections of liquidity by central banks.

The yen JPY= rose 0.8% to 106.80 per dollar with a flight to safety in the Asia afternoon as stock markets around the region extended losses. MKTS/GLOB

The pound and euro were ahead, but struggled to win back more than a fraction of the ground ceded to the dollar on Tuesday. The Aussie and kiwi languished below 60 cents.

Markets have crumbled this month as investors liquidated nearly everything for cash - driving up the dollar's value and the cost of borrowing the greenback abroad.

"Funding strains are still there, and I think that is what's spooking the market still," said Moh Siong Sim, currency analyst at the Bank of Singapore.

The world is adopting a war footing as the pandemic spreads and country after country announces draconian lockdowns. The virus has killed over 8,000 people globally, while the total number of cases is approaching 200,000, a Reuters tally shows.

While crisis is also being met with massive fiscal and monetary policy measures, there are only tentative signs that it is working.

The Bank of Japan on Tuesday made its biggest injection of dollar funds since 2008, helping to reduce the cost of dollars, relfected in cross-currency basis swap spreads. spread on dollar/yen swaps JPYCBS3M= narrowed to around -58 basis points from 120 basis points on Tuesday.

Three-month euro/dollar cross-currency basis swap spreads EURCBS3M=ICAP had also fallen back overnight to 39 basis points from as high as 120 basis points.

But it failed to improve market sentiment.

"The newsflow is about as fluid as we have seen," said Chris Weston, head of research at Melbourne brokerage Pepperstone.

"It mirrors that of the (2008) financial crisis if not worse ... it's very difficult to deal with this and I think FX traders don't really know where to look at the moment."

The pound GBP= pared some gains to sit 0.4% higher at $1.2094 and the euro EUR= was steady at $1.1007.

Export exposed currencies fared much worse.

The Australian dollar AUD=D3 has lost nearly 15% against the greenback this year and fell below 60 cents for the first time since 2003 overnight. It last stood at $0.5930, while the kiwi NZD=D3 was $0.5942.

Traders have also been watching volatility in the U.S. Treasury market to get a sense of the demand for dollars.

The yield on benchmark U.S. 10-year Treasuries US10YT=RR soared 34 basis points overnight, the largest single-day rise since 2004. US/

"It all stems from a shortage of US dollars," said Gunter Seeger, senior vice president in investment-grade fixed income at New York asset manager PineBridge Investments.

"People are very, very nervous," Seeger said.

"Everyone's nervous about the virus, about oil prices, about their job, about everything."

Get Live Forex Signals for Profit

http://sharetipsinfo.comJust get registered at Sharetipsinfo and earn positive returns

Indonesia’s currency has been in a free-fall, even defying the central bank’s intense market intervention. The decline may now gather further pace as demand for dollars climb from companies set to repatriate dividends.

With the foreign investors adopting a flight-to-quality approach, even the high real returns on Indonesian sovereign bonds won’t be enough to stop the rush to exit, according to I Made Budhi Purnama Artha, head of treasury at Maybank Indonesia in Jakarta. Bank Indonesia should pump in more dollars to prevent the rupiah from declining further and protect investor confidence, he said.

The rupiah has gone from being Asia’s best performing currency in January to the worst in the past month as a global sell-off sparked by coronavirus concerns deepened. On Tuesday, the currency weakened past 15,000 to a dollar for the first time since the emerging market rout in 2018, raising concerns even a near-record foreign exchange reserve and all-out central bank intervention may fail to ease the turmoil.

Foreign investors have pulled more than $4 billion from rupiah bonds this year, on course for the biggest quarterly outflow ever, and have dumped about $600 million of shares, contributing to the third trading halt within a week. With the risk-off sentiment guiding investors, an expected interest rate cut on Thursday may do little to reverse the sell-off.

The trajectory of rupiah will “depend on whether global financial markets will still be as volatile as this month in the future,” said Wisnu Wardana, an economist at PT Bank Danamon Indonesia. “Our base scenario for Covid-19 is it lasts in Indonesia for six months with a peak in May. Pressure on rupiah might increase especially if other countries succeed to contain the virus while Indonesia struggles.”

The rupiah fell as much as 0.3% to 15,224 to a dollar on Wednesday, extending losses this year to almost 9%. The yield on benchmark 10-year rupiah bonds was at 7.58%, near its highest level since August, according to data compiled by Bloomberg.

A second wave of outflows from Indonesian markets may come in April and May, when foreign companies typically repatriate their dividends. But with the U.S. Federal Reserve cutting rates by 100 basis points, the high carry on Indonesian may lure bank investors and cushion the impact, Maybank’s Artha said.

Indonesian bonds are a barometer of risk appetite with foreign investors owning about 35% of the nation’s total sovereign rupiah bonds.

Here’s what market strategists and economists are saying about the outlook for rupiah:

David Sumual, economist at PT Bank Central Asia

“Bank Indonesia has to ensure sufficient liquidity between the central bank and banks, banks and banks, banks and the real sector at different costs. The intervention using forex reserves can be done because the needs of dollars for trade are declining. Aside from what the bank has been doing now, they still have bilateral swap agreements and the Chiang Mai Initiatives as a second line of defense. The virus pandemic needs a strong fiscal response. The government would also need to consider issuing a decree if it needs to exceed the legal budget deficit of 3% of GDP.”

I Made Budhi Purnama Artha, head of treasury at PT Maybank Indonesia

“During limited liquidity, demand for dollars is relatively pretty high, resulting in continued rupiah weakening. Dollar demand also triggered by the sell-offs by equity and fixed income investors. The cut in Fed fund rate will make Indonesian assets relatively attractive again and has the potential to attract bonds investors to re-enter Indonesian market. This can offset demand from fleeing equity investors and demand for dollars which tend to rise in April-June on dividend payment.”

Wisnu Wardana, economist at PT Bank Danamon Indonesia

“The most important thing is to maintain dollar supply domestically. Therefore, the policy to reduce foreign currency reserve requirement should be appreciated. Under the current circumstances, the best course of action is to guide the value of financial instrument to its fundamental level.”

Josua Pardede, economist at PT Bank Permata

“The strengthening of the U.S. dollar against the rupiah and other developing country currencies is influenced by the anticipated global economic slowdown from Covid-19 after it being declared a global pandemic. In addition, the very aggressive response of the U.S. central bank also gave a negative signal to emerging market financial markets, including the Indonesian capital market.

Get Live Forex Signals for Profit