Weekly FX Outlook: The Pound has strengthened on broad USD weakness
|- Indian currency continued to see a carnage led by the announcement of news cases of coronavirus globally as well on the domestic front. USDINR spot onshore has been constantly bid as arbitrageurs have been seizing the gap between offshore and onshore forward points which widened to 40 paise yesterday.
- The country's foreign exchange reserves reached a new record level of $ 481.54 billion with a huge increase of $ 5.42 billion in the week ended 28 February. This is the 23rd consecutive week when foreign exchange reserves have increased. A part of it is also because of revaluation gains as other currencies have strengthened against USD.
- The Euro was among the top performers this week; hitting fresh yearly highs. The dollar is feeling the brunt of the selling pressure as coronavirus cases in the US rose with California declaring state of emergency. Markets are pricing in a 10bp rate cut from the EU end at the upcoming policy meeting.
- The Pound has strengthened on broad USD weakness. A raft of fiscal stimulus measures in the form of tax cuts and additional government spending to boost the economy are anticipated. This is likely to outweigh a 25bps cut which is already factored in.
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