Aurelia Butler

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BENGALURU (Reuters) – Unfazed by the dollar’s recent strength, analysts polled by Reuters predict a weaker greenback in a year amid an improving global economy and expectations the U.S. Federal Reserve will stop hiking interest rates well ahead of the European Central Bank.Bucking the latest downward trend, the dollar rose nearly 3% in February, its first monthly gain since September, surprising FX markets which were betting on the currency to remain on the back foot for the remainder of the year.The dollar index is up over 1% for 2023 largely because of stronger-than-expected U.S. economic data and a corresponding change to expectations of interest rate hikes by the U.S. central bank.”You’ve had this recent hawkish repricing of Fed rate hike expectations … which obviously helped the dollar to rebound in February. So we can certainly see that being sustained in the very short term,” said Lee Hardman, a currency economist at MUFG.”Beyond that, though, we still are sticking to our view for further dollar weakness through the rest of this year.”The dollar was forecast to trade lower than current levels against all major currencies in the next 12 months, according to the Feb. 28-March 2 poll of 69 currency specialists.While analysts have been predicting a weaker dollar 12 months out for over five years, their predictions only came true in 2020 when the currency weakened more than 6.5%.There was also no clear consensus among analysts in the poll over dollar positioning, which turned net short dollar last November.When asked what change in dollar positioning they predicted by the end of March compared with the last available data from the end of January, analysts were mostly split. While 11 of 39 expected a decrease in short positions, 10 said they would be around the same. Among the remaining 18, a dozen forecast a reversal to net long positions and six predicted an increase in net short positions.”The positioning certainly is more neutral or has been scaled back because the conviction in the short term is not strong over dollar moves,” MUFG’s Hardman added.The euro was forecast to trade around $1.07, $1.08 and $1.10 in the next one, three and six months, respectively. It was then expected to strengthen around 6% to change hands at $1.12 in a year. It was last trading around $1.06 on Thursday.Even the British pound, which dropped more than 10% last year, was expected to claw back around half of those losses in 12 months.Sterling was predicted to rise from its latest level of $1.19 to $1.22, $1.23 and $1.26 in the next three, six and 12 months, respectively.”I think you’re going to see people saying, ‘well, what do I want to buy if I don’t want to be in dollars? I think the dollar’s topped out but I’m not confident in that. Where do I want to be?'” said Gavin Friend, senior markets strategist at NAB.”I think Europe would be one of those, UK would be one of those because it’s been so cheap,” he said.(For other stories from the March Reuters foreign exchange poll:) More

BENGALURU (Reuters) – The Reserve Bank of Australia will hike its interest rate again by 25 basis points to 3.60% on Tuesday, followed by one more lift next quarter, before pausing until next year, taking the peak rate higher than previously thought, a Reuters poll found.Despite 325 basis points in rate increases since May, controlling inflation has been a major challenge for the RBA as it reached a more than three-decade high of 7.8% last quarter, considerably above the target range of 2%-3%.The central bank was forced to abandon its previous plan to pause at its February policy meeting and signaled more rate hikes could be needed in the months ahead.All but one of the 28 economists in the Feb. 27-March 2 Reuters poll said the RBA would raise its official cash rate by 25 basis points, reaching a more than decade-high of 3.60%, at its March 7 meeting. One saw a 15 basis-point move.”The RBA does seem more concerned about inflation. The fact demand is a key driver and not just the supply side, we think they have got more work to do to ensure inflation comes back to target,” said Catherine Birch, senior economist at ANZ, who forecast a 25 basis point hike at the upcoming meeting.It is then expected to lift rates to 3.85% in the April-June quarter – a level not seen since April 2012 – and hold them for the rest of the year.The minutes from last month’s meeting showed the RBA discussed only two options – hiking by 50 basis points or 25 basis points. This was a marked change from December when it had considered staying put.A strong minority of more than one-third of respondents, 10 of 28, predicted rates to peak even higher at 4.10% next quarter. One economist had a peak of 4.35% in the third quarter.The expected peak has been raised by markets to around 4.10%, up from 3.60% at the beginning of the year. This suggests there could be at least three more rate increases in the near future.Yet even with further rate increases, inflation was not expected to return to the RBA’s 2-3% target range before the second half of 2024, pointing to a long period of pain ahead, a separate Reuters poll showed.”If global inflation resurges or domestic supply chains are disrupted by weather events, we may need to see interest rates move even higher to quell prices,” said Harry Murphy Cruise, economist at Moody’s (NYSE:MCO) Analytics.”Our baseline suggests interest rates won’t need to exceed 3.85% to bring down inflation. That said, several factors could knock Australia off this path.”Several economists foresee trouble ahead for the Australian economy, partly because higher interest rates have already slowed activity in the housing market, where prices are expected to fall more than double the correction during the 2008 financial crisis.Just over a quarter of economists, 8 of 28, forecast at least one rate cut by year-end. More

BENGALURU/NEW YORK (Reuters) -U.S. boutique investment firm GQG Partners Inc has bought shares worth $1.87 billion in four Adani group companies, marking the first major investment in the Indian conglomerate since a short-seller’s critical report sparked a stock rout.Seven listed Adani companies have lost some $135 billion in market value since Jan. 24, when Hindenburg Research accused it of improper use of offshore tax havens and stock manipulation. The group, led by billionaire Gautam Adani, denied the allegations. It later called off a $2.5 billion share sale.The investment also comes on a day when India’s top court asked market regulator SEBI to investigate the group for any lapses related to public shareholding norms or regulatory disclosures.The group has been trying reassure investors with road shows and calls with bond holders. According to sources, Adani has told creditors it has secured a $3 billion loan from a sovereign wealth fund.U.S.-based, Australia-listed GQG has, through block deals, bought shares worth 154.46 billion rupees in four Adani group companies, including the conglomerate’s flagship firm Adani Enterprises, a regulatory filing showed. The shares were sold by an Adani family trust, using Jefferies as a broker.Based in Fort Lauderdale, Florida, GQG manages $88 billion in assets, in global, U.S. and emerging markets equities funds.In early Australian trade, GQG Partners shares were down 2.3% while the S&P/ASX200 was up 0.4% on Friday.”We believe that the long-term growth prospects for these companies are substantial,” said Rajiv Jain, GQG’s chairman and chief investment officer, adding the firm’s investments take into account a five-year horizon. Before founding GQG, Jain spent 22 years at Vontobel Asset Management.GQG took a 3.4% stake in Adani Enterprises for about $662 million, 4.1% in Adani Ports for $640 million, 2.5% in Adani Transmission for $230 million, and a 3.5% stake in Adani Green Energy for $340 million, according to the filing.Jain said that as an investor in infrastructure companies, he has been following Adani for six years. “Our view was that these assets would not be low forever,” he told Reuters.Before investing, Jain said GQG did a “deep dive on our own” as part of due diligence, including conversations with the group’s vendors, bankers and partners. “We actually disagree with (Hindenburg’s) report,” he said, adding that infrastructure companies are subject to tight regulation and therefore the risk of fraud is low.Jefferies approached GQG about the deal roughly five weeks ago, when its senior leadership was in Miami, two sources familiar with the matter said. Jefferies has been working with GQG for years and understands its investment style, one of the sources added. “This transaction marks the continued confidence of global investors in the governance, management practices and the growth of Adani Portfolio of companies,” said Adani Group CFO Jugeshinder Singh. In the run-up to the announcement, Adani group shares rallied, with Adani Enterprises climbing nearly 35% over the last three sessions, Adani Ports 11% and Adani Green Energy 16%. Adani Transmission rose 10% in the previous two sessions.”For the short-term, this will definitely be a big positive for the sentiment for Adani stocks,” said Avinash Gorakshakar, head of research at Profitmart Securities.”But in the longer term, the market is going to look at how growth is going to come.”Jefferies India was the sole broker for GQG’s transaction. ($1 = 82.5180 Indian rupees) More

TOKYO (Reuters) -Core consumer inflation in Japan’s capital Tokyo slowed in February as the effect of government energy subsidies kicked in, though an index stripping away the effect of fuel hit a fresh three-decade high in a sign of broadening inflationary pressure.Separate data showed Japan’s jobless rate hit a three-year low of 2.4% in January, suggesting intensifying labour shortages will prod companies to raise wages and help ease the pain households are feeling from rising costs of living.The readouts cast doubt on the Bank of Japan’s view the recent cost-driven inflation will prove temporary, and will likely keep the central bank under pressure to phase out its massive monetary stimulus, analysts say.”Inflation in the capital has fallen less than we expected last month, which suggests some upside risks to our forecast for inflation to fall below the Bank of Japan’s 2% target by mid-year,” said Darren Tay, Japan economist at Capital Economics.Core consumer prices in Tokyo, a leading indicator of nationwide trends, rose 3.3% in February from a year earlier, matching market forecasts and slowing from a nearly 42-year high of 4.3% hit in January, government data showed on Friday.The Tokyo core consumer price index (CPI), which excludes fresh food but includes fuel costs, exceeded the BOJ’s 2% target for nine straight months.The slowdown was mostly due to the effect of government energy subsidies to curb soaring utility bills, the data showed.A separate index for Tokyo stripping away both fresh food and energy prices, which is closely watched by the BOJ as a gauge of price pressures driven by domestic demand, was 3.2% higher in February than a year earlier, picking up from January’s 3.0% rise.It marked the fastest year-on-year pace of increase since August 1991, when the index also rose 3.2%.Energy costs rose 5.3% in February from a year earlier, much slower than a 26.0% spike in January. But ex-fresh food prices were up 7.8% in February, faster than a 7.4% rise in January.Service inflation, which the BOJ sees as key to achieving sustained wage growth, perked up to 1.3% in February from 1.2% in January, the data showed.Nationwide core consumer prices rose 4.2% in January from a year earlier, hitting a fresh 41-year high, as an increasing number of companies passed on higher costs to households.With inflation exceeding its 2% target, the BOJ has seen its yield curve control (YCC) come under attack from investors betting it will soon have to change policy and allow a near-term interest rate hike.Markets are rife with speculation the central bank will phase out or abandon YCC under incoming BOJ Governor Kazuo Ueda, who succeeds incumbent Haruhiko Kuroda in April.BOJ policymakers have repeatedly stressed the need to maintain ultra-loose policy until inflation is seen sustainably hitting their 2% target accompanied by higher wage growth.Under YCC, the BOJ guides short-term interest rates at -0.1% and the 10-year bond yield around 0% with an implicit ceiling set at 0.5%. More