So what does y'day's frenzied buying in #bonds indicate?Is the #RiskOn trade over?
Well,not quite--With $9 trillion of excess global #liquidity sloshing around due to coordinated Central Bank rate cuts,since #Covid_19, equities will move up,albeit with severe bouts of volatility
While #RiskOn has been global &local trend for last many weeks, y'day's #Fed minutes brought focus back to underlying global economic weakness
Strength in #DXY shows,Dollar weakness may be over&there could be renewed safe haven buying leading to some surge in #RiskOff
In a nutshell,if buying in #RiskOff US bonds continues,#BondYields will fall,Bond prices will rise&that may take sheen off Equities' rally in S&P,Dow&locally in #Sensex& #Nifty,but since excess liquidity is strong,stocks will continue to rally,overall,albeit with more volatility
A stronger #Dollar due to steady surge in #RiskOff trade,would eventually lead to fall in global #CrudeOil prices&precious metals too,as both are priced in Dollars
Which means #Rupee&other currencies could again see #depreciation,which will however be offset by lower #Oil prices
Usually,surge in #RiskOff trade should ideally lead to higher #Gold&Silver prices as these are considered safe bets,but it does'nt always work out that way
Gold&Silver will eventually be dictated by #DollarIndex-Last 2 months,Gold rose,only because #DXY fell,from 96.5 to 92.3!
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#Rupee has fallen far lower Vs #Dollar,comparatively👇
Euro,2 days ago,went below $1 for 1st time in 20yrs,reflecting big weakness in #Euro
Rupee,displaying strength,has risen big time against Euro,Pound &Yen💪
So #Madarsa dentists from Congress should stop lecturing on Rupee
@narendramodi govt in a landmark measure has allowed international trade settlement in #Rupees
Explained👇
When countries import&export goods&services,they have to make payments in foreign currency
Since US Dollar is world’s reserve currency,most trades are entered into in USD
Here,both parties involved have to incur conversion expenses&bear risk of foreign exchange rate fluctuations
This is where trade settlement in Rupee comes in-instead of paying &receiving US Dollars,invoice will be made in Indian Rupees if counterparty has #Rupee Vostro account
Some Business News anchors are saying Rupee has fallen against Dollar because our monthly #TradeDeficit is hitting $20bn&our Current Account Deficit(CAD),will be 3%
Well,$20bn a month Trade Deficit is no big deal for us,given that our Goods+Services Exports are a massive $670bn
2.5-3% CAD for an economy growing at average of 7.5-9.5% is not a big deal either
In fact,in last 8yrs,average CAD under @narendramodi govt has been sub 2%,so we have enough leeway on that count
Why then are major Currencies falling against Dollar?
Industrial growth estimated at 11.8% &Services at 8.2% in FY22 show how Economy under @narendramodi is ready to fire on all cylinders
Most Growth Parameters are back to pre-Pandemic levels,as India heads into #UnionBudget2022
#GDP&GVA growth 1.3%&1.9% over Pre #COVID19 levels
#EconomicSurvey shows,be it Operationalisation of Airports or Spread of Bank Branches, @narendramodi govt has truly transformed India,with financial inclusion getting top priority
India set to be Fastest growing for next 2yrs as per IMF,thx to bold reforms by #PMModi #Modinomics