FxWirePro: Daily Commodity Tracker - 21st March, 2022 
Dollar Holds Steady as Markets Shift Focus to 2026 Rate Cut Expectations 
Japan’s Rising Inflation Strengthens Case for a Near-Term BOJ Rate Hike 
Gold Prices Edge Higher as Markets Await Key U.S. PCE Inflation Data 
Singapore Maintains Steady Monetary Outlook as Positive Output Gap Persists into 2025 
UK Raises Deposit Protection Limit to £120,000 to Strengthen Saver Confidence 
New RBNZ Governor Anna Breman Aims to Restore Stability After Tumultuous Years 
China’s Services Sector Posts Slowest Growth in Five Months as Demand Softens 
Oil Prices Hold Steady as Ukraine Tensions and Fed Cut Expectations Support Market 
Japan’s Inflation Edges Higher in October as BOJ Faces Growing Pressure to Hike Rates 
Indonesia Aims to Strengthen Rupiah as Central Bank Targets 16,400–16,500 Level 
The Reserve Bank of India (RBI) is expected to leave its policy rate unchanged at 6.25 percent with a dovish stance on Wednesday afternoon, aimed at striking a balance between bolstering the nation’s economic growth and securing the retail inflation target of 4 percent±2 percent on a durable basis. In addition, a decision to stay on hold would be able to enhance foreign investors’ confidence in the MPC and the central bank’s independence.
The RBI will likely deliver a 25 basis points rate cut in October when the nation’s CPI inflation data incorporating the impact of the GST are available, as the central bank needs revive India’s credit supply growth. India’s CPI inflation cooled to a record low of 1.54 percent y/y in June from 2.18 percent the previous month, largely due to the favorable base effect and a drop in food and oil prices. Moreover, the nation’s cumulative rainfall between June 1 and July 31 was 1.6 percent above the long-run average, Scotiabank reported.
Foreign investors have added to their holdings in local bonds recently on hopes for an easing monetary policy, while chasing the highest real yields of government bonds in the region. India’s foreign reserves rose to a record high of USD 391.33bn as of 21 July amid continued portfolio inflows.
Moreover, the central bank has piled up its long positions in FX forwards/futures to USD 22.6 billion as at end-June, avoiding pumping liquidity into the banking system filled with surplus cash. It comes as no surprise to the market as the INR’s strength had spurred the government’s concerns. While mounting foreign currency stockpile has slowed the pace of appreciation in the INR, it also provides a buffer to the INR in case of a withdrawal of global liquidity.
"USD/INR is likely to stay in the range of 64-65 for now. We would like to sell the pair if it breaks below the 64 support and buy the pair if it rallies through the 65 resistance," the report commented.
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