UAE-Saudi digital currency soon
The UAE Central Bank is working on a digital currency with the Saudi Arabian Monetary Authority to speed up financial transactions between nations | overeign bonds and stocks rallied in India on optimism of a more dovish monetary policy after the government named former bureaucrat Shaktikanta Das as the central bank chief. The rupee weakened amid investor concerns, touching 72.46 to the dollar before recovering slightly to 71.99.
The yield on the benchmark 10-year bonds dropped 12 basis points to 7.41 per cent, sending bonds to their highest levels since April on a closing basis. The S&P BSE Sensex gauge rose 1.8 per cent, led by lenders, including Yes Bank Ltd. and Kotak Mahindra Bank Ltd. The rupee extended Tuesday’s pollinduced losses and was down 0.2 per cent against the dollar.
Das, who oversaw Prime Minister Narendra Modi’s controversial cash ban program, was named central bank chief late on Tuesday, a day after Governor Urjit Patel’s surprise exit tipped financial markets into a turmoil. Das, who has often advocated rate cuts and been pro-growth during his stint at the ministry, comes in at a time when inflation is trending lower in India amid an easing in food and energy costs. ■
India’s consumer inflation is likely to have eased to 2.58 per cent in November, the slowest pace of increase since July 2017, according to a Bloomberg survey, as against 3.31 per cent in the prior month. “We are constructive on bond markets primarily on favourable bond supply dynamics and our expectation that lower inflation will lead to a dovish RBI,” said Vivek Rajpal, a rates strategist at Nomura Holding Inc. in Singapore. “Although one cannot say with certainty, it is likely that Das may have a neutralto-dovish bent on monetary policy.” Policy rates in India are decided by a monetary policy panel, which includes the governor.
Inflation is benign at the moment but inflation-targeting will continue to be important for the central bank, Das said in his first briefing after taking over as governor.
The new governor’s comments are “extremely bullish for bonds, provided that other conditions like US yields, crude prices remain well behaved,” said Sandeep Bagla, associate director at Trust Capital Services Pvt. in Mumbai.