Yen falls to the lowest level in seven months; Rupee remains resilient By Gaurang Somaiya Rupee volatility continued to remain low following no major cues on the domestic front. Market participants have been keeping an eye on the global events that are triggering volatility for most of the currencies. Economic numbers from the US have been mixed but overall have beaten estimates that are leading to support the dollar at lower levels. Volatility for the currency has been curtailed by the RBI that has been ramping its reserves at lower levels and at the same time selling to keep the weakness in check. This week, on the domestic front, manufacturing and services PMI numbers will be released and better-than-expected data could support the currency at lower levels. We expect the USDINR (Spot) to trade sideways and quote in the range of 81.60 and 82.30. This week, from the US, manufacturing and services PMI numbers along with employment numbers will be important to watch. Fed meeting minutes will also be released, wherein market participants will be awaiting for cues from the other Fed officials on rate outlook. Better-than-expected economic numbers and a hawkish outlook from the Fed could extend gains for the dollar. We expect the dollar to trade with a positive bias and quote in the range of 101.50 and 103.20. Euro and Pound fell following broader strength in the dollar against its major crosses and as economic numbers from both the EZ and the UK were disappointing. But the Japanese Yen continued to remain weakest of the lot as it fell to the lowest level in seven months. The divergence between policies of the Bank of Japan and the Federal Reserve continued to keep the currency weighed down against the US dollar. Bank of Japan has maintained a dovish stance and that too kept the safe haven currency under pressure. We expect the USD JPY pair to trade with a positive bias and quote in the range between 143.50 and 145.20. (Gaurang Somaiya, Forex & Bullion Analyst, Motilal Oswal Financial Services. Views expressed are the author’s own. Please consult your financial advisor before investing.)
Retail inflation in milk was reported at 8.85% in May 2023. The milk inflation has remained elevated at over 6% since August 2022. Despite India being the largest milk producer since 1998, the commodity has been the second biggest factor after cereals such as rice and wheat in driving up retail inflation in the last fiscal.
Milk has the second highest weight in the food and beverages basket of the consumer price index at 6.61%, a notch lower than cereals and products with a 9.67% weight. Organised players, including Mother Dairy and Amul, hiked prices multiple times in the last one year citing higher fodder cost, robust demand and some impact due to reports of lumpy skin disease.
Industry sources said feed cost, which has a share of more than 65% in the cost of production of milk, has increased to Rs 20/kg from Rs 8 a year ago. The finance ministry in April had attributed the elevated milk inflation to a demand supply mismatch and said it could be one of the factors apart from volatile international crude oil prices and constrained supplies of milk would influence the country’s inflation trajectory.
“Milk production has been impacted by a lumpy skin disease infecting millions of cattle in late 2022,” the ministry said in the monthly economic review, adding that the vaccination drive against the disease is expected to curb the spread and immune the cattle against the skin disease.
According to official data, currently India is the world’s largest milk producer, and has a share of 23% in global milk production. For the first time in decades, the country’s milk production is likely to have stagnated in 2022-23 due to Lumpy Skin Disease in cattle across several states and the lagged effect of Covid-19 in the form of stunting of the animals, a senior official with department of animal husbandry and dairying recently had stated. The milk production was estimated at 221 million tonne in 2021-22.
Retail inflation in milk was reported at 8.85% in May 2023. The milk inflation has remained elevated at over 6% since August 2022. Despite India being the largest milk producer since 1998, the commodity has been the second biggest factor after cereals such as rice and wheat in driving up retail inflation in the last fiscal.
Milk has the second highest weight in the food and beverages basket of the consumer price index at 6.61%, a notch lower than cereals and products with a 9.67% weight. Organised players, including Mother Dairy and Amul, hiked prices multiple times in the last one year citing higher fodder cost, robust demand and some impact due to reports of lumpy skin disease.
Industry sources said feed cost, which has a share of more than 65% in the cost of production of milk, has increased to Rs 20/kg from Rs 8 a year ago. The finance ministry in April had attributed the elevated milk inflation to a demand supply mismatch and said it could be one of the factors apart from volatile international crude oil prices and constrained supplies of milk would influence the country’s inflation trajectory.
“Milk production has been impacted by a lumpy skin disease infecting millions of cattle in late 2022,” the ministry said in the monthly economic review, adding that the vaccination drive against the disease is expected to curb the spread and immune the cattle against the skin disease.
According to official data, currently India is the world’s largest milk producer, and has a share of 23% in global milk production. For the first time in decades, the country’s milk production is likely to have stagnated in 2022-23 due to Lumpy Skin Disease in cattle across several states and the lagged effect of Covid-19 in the form of stunting of the animals, a senior official with department of animal husbandry and dairying recently had stated. The milk production was estimated at 221 million tonne in 2021-22.
Overnight, U.S. stocks extended Friday’s bruising sell-off as investors rushed to protect themselves against the prospect of a weakening economy.
Oil prices ticked lower on Tuesday on demand worries as coronavirus lockdowns in China, the top oil importer, continued. Brent crude slipped 0.5% to $105.4 a barrel after falling 5.7% on Monday.