2025-04-14 12:01
Key takeaways Ongoing US policy uncertainty has created a bifurcated USD, leading us to rethink our USD framework… …which now consists of cyclical, political, and structural drivers… …and sees the DXY facing some downward pressures. Our trifactor framework, resting on US growth vis-à-vis the rest of the world, relative yields and risk appetite, which has helped us decide whether the USD will strengthen or not, is not working (the right pie in Chart 1). Currently, USD yields are still higher than for other currencies, along with slowing global growth and intensifying risk aversion, but the USD has been weakening. We notice that there is a bifurcated USD whereby it is struggling versus other core G10 currencies (i.e., EUR, JPY, and CHF) but coping versus many smaller G10 and emerging market ones. This points to the risk aversion channel via US policy uncertainty dominating (Chart 2). Source: HSBC Global FX Research Source: Bloomberg, HSBC Most recently, US President Donald Trump’s decision on 9 April to limit reciprocal tariffs to 10% for 90 days to allow for negotiations provoked a big reaction in equity markets globally, but the impact on FX has been more modest and short-lived. A blanket import tariff of 10% is still significant, while the 100%+ tariffs between China and US are stratospheric. Negotiations may offer an escape, but it is worth noting that the phase 1 trade deal between the US and China came 21 months after US President Trump first raised tariffs. Now the US is also trying to negotiate with 70+ trading partners in 90 days. The clock is ticking. All this led us to circle back to another framework to think about the USD, which we used in US President Trump’s first year in 2017. It was helpful to assess the USD against its cyclical, political, and structural drivers (see the left pie in Chart 1). Back then, the USD struggled as global growth was accelerating, US policy uncertainty lingered, and questions about the USD’s structural outlook surfaced amid Trump’s tax cut proposals. In some ways, history is rhyming. Currently, the USD’s cyclical backdrop is less supportive in isolation, but the global outlook argues against being overly negative on the currency. US policy uncertainty is high and is weighing on the US Dollar Index (DXY) via risk aversion. There are questions about its structural properties. After considering the US current account position, fiscal risks and holdings of US securities, we think that the structural discussion around the USD is louder, and the tail risk is higher. Putting these together tells us that the DXY will likely be in a softer position over the coming quarters. https://www.hsbc.com.my/wealth/insights/fx-insights/fx-viewpoint/usd-to-soften-in-the-quarters-ahead/
2025-04-14 12:01
Key takeaways The US has announced a 10% baseline tariff effective from 5 April, along with individual reciprocal tariffs of up to 49% on some economies from 9 April. US tariffs are rising in a way that FX markets deem to be a concern. With US tariff plans known, the FX focus will likely switch to retaliation measures by others and how the US and global economy evolves. In the lead up to, and on, 2 April 2025, i.e., “Liberation Day”, US President Donald Trump announced the US will: (1) implement a 10% baseline tariff on all imports effective from 5 April, (2) subsequently implement higher individual reciprocal duties on partners the US has the largest trade deficits with (see the table below) effective from 9 April, and (3) impose a 25% tariff on imports of automobiles effective from 3 April, along with a 25% tariff on imports of autos parts that will take effect by 3 May. For Canada and Mexico, the White House said that existing fentanyl/migration International Emergency Economic Powers Act (IEEPA) orders remain in effect and are unaffected by the latest announcements. United States–Mexico–Canada Agreement (USMCA) compliant goods will continue to see a 0% tariff, non-USMCA compliant goods will see a 25% tariff, and non-USMCA compliant energy and potash will see a 10% tariff. Source: The White House As for FX markets, we believe there was truly little priced into exchange rates given the range of outcomes and how the US Dollar Index (DXY) was largely moving in line with its yield differential (Chart 1, overleaf). The DXY dropped by c0.7% to 103.1 (Bloomberg, 3 April 2025 at 9:45am HKT) and we believe the main FX driver is likely to come through the risk channel (Chart 2, overleaf). In a “risk off” environment, “safe haven” currencies are likely to outperform “risk on” currencies. Source: Bloomberg, HSBC Note: Correlation is computed based on weekly changes in the period from 2014 to 2025. Source: Bloomberg, HSBC One important issue for the broad USD, which could take a few weeks, if not longer, to decipher, relates to US and global growth. The path of each will determine whether the USD can strengthen further, becomes bifurcated or stages a continued fall across the board. So, we need to be mindful of currencies that are more closely linked to the US economy (Chart 3), and how others could perform as the market anticipates the path for global growth. Relative performance may also hinge on how (or if) countries retaliate, how long it takes to negotiate an exit from US tariffs, and how their economy is placed to weather the tariff damage in the meantime. Source: Bloomberg, HSBC The tariff plan announced for Asia is also arguably more punitive than expected − all except Singapore face more than 10% reciprocal tariffs, ranging from 24% to 46%. We expect Asian currencies to come under depreciation pressure as a result. USD-CNY fixing rate is relatively steady at 7.1889 today, and as the trading is allowed within 2% of the fixing rate, the trading band range is 7.0451 to 7.3327 (Bloomberg, 3 April 2025). We believe the Chinese authorities have their own motivations for keeping USD-RMB reasonably stable, but some moderate and gradual adjustment may still be warranted to alleviate the impact on exporters. https://www.hsbc.com.my/wealth/insights/fx-insights/fx-viewpoint/fx-liberation-day-10-baseline-tariff-and-more/
2025-04-14 07:04
Key takeaways Central banking is not the easiest of jobs even in relatively stable times. And the current environment is anything but stable. Market volatility has jumped in recent weeks as investors struggle to assess the impact of the US administration’s trade policies. Credit spreads are an important leading indicator for the macro cycle, and perhaps the best single variable to give investors a handle on recession risk. Asian stock markets sold off sharply last week but pared some losses following the US administration’s partial tariff reprieve. Chart of the week – Sticky bond yields A week after announcing ‘reciprocal tariffs’ on trade partners, the US administration has applied the brakes. A 90-day pause sees universal tariffs of 10% for all countries, except China. Higher tariffs for certain sectors remain in place. After days of market declines there has been a big relief rally for stocks. So, what happens next? Markets are still spinning around, with ultra-high policy uncertainty meaning that volatility will remain elevated. Last week’s initial sell-off saw a combination of falling stocks and sticky bond yields, with the market factoring in a ‘stagflation lite’ situation. Specifically, the bigger-than-expected ‘tariff shock’ dragged the growth outlook lower and pushed short-term inflation expectations higher. Recession risk rose materially. Despite the interim reprieve, uncertainty still reigns. US growth continues to slow and trade policy will still raise inflation. For now, the Fed remains in reactive mode – waiting for bad news on the economy. For markets, it means that bond yields are still sticky, and the term premium is elevated. Meanwhile, international stocks are still outperforming year-to-date. With ‘policy puts’ more evident in Europe and China, the case for global investors to rotate to Europe, Australia, Asia, and the Far East (EAFE) and to emerging markets still looks good. Market Spotlight Flight to quality Uncertainty and volatility are set to be a feature, not a bug, of investment markets in the near term. For investors considering ways of building portfolio resilience without sacrificing growth, one strategy is to focus on ‘quality’. Quality is a stock market factor – and a proven long-term portfolio diversifier – that can defend against downside risk but still benefit from market upswings. Under the hood, it captures exposure to firms with strong profitability, consistent financial performance, and the safety of robust financial health. These traits help it deliver through-the-cycle performance. It pays off because quality stocks tend to be undervalued by the market. Meanwhile, investors often bid up the prices of lower quality firms that promise lottery-like returns, but which have a habit of underperforming in a downturn. Some multi-asset insights show that quality delivers its strongest active returns when the economic outlook begins to cool – making it a potentially useful defensive strategy in portfolios. Faced with elevated volatility, investors should pay attention to diversification and selectivity in asset allocation. The value of investments and any income from them can go down as well as up and investors may not get back the amount originally invested. Past performance does not predict future returns. The level of yield is not guaranteed and may rise or fall in the future. For informational purposes only and should not be construed as a recommendation to invest in the specific country, product, strategy, sector, or security Diversification does not ensure a profit or protect against loss. Any views expressed were held at the time of preparation and are subject to change without notice. Any forecast, projection or target where provided is indicative only and is not guaranteed in any way. Source: HSBC Asset Management, Bloomberg. Data as at 7.30am UK time 11 April 2025. Lens on… Fed biding its time Central banking is not the easiest of jobs even in relatively stable times. And the current environment is anything but stable. Market volatility has jumped in recent weeks as investors struggle to assess the impact of the US administration’s trade policies. The Fed must consider not only the impact of the trade policies themselves but also the resulting market volatility on the economy. However, to do this, it must also consider the starting point. Recent data show the economy ended Q1 with the labour market in relatively good health while the downtrend in inflation has been slow and bumpy. This favours the Fed biding its time and seeing where trade policy settles. However, it doesn’t mean the Fed will sit on its hands indefinitely. Continued uncertainty around trade policy, current market volatility and recent survey and consumer data point to a slowdown. Given slowdowns can intensify rapidly, we see the Fed reacting to softer activity data and easing policy gradually from mid-year. Credit conditions Credit spreads are an important leading indicator for the macro cycle, and perhaps the best single variable to give investors a handle on recession risk. That’s important given that policy uncertainty and tariffs have raised worries over the prospect of stagflation and recession. Spreads have risen sharply recently – with US high yield seeing the most significant price adjustment. But they are not extreme versus long run history. That makes sense. The ingredients for a dramatic rise in default rates aren’t present today, even if defaults are likely to creep up. That’s because private sector’s balance sheets remain strong, corporate profits look fine for now, and the maturity wall isn’t too steep. Some credit specialists note that the absolute repricing at this stage is in line with what we have seen in recent event-driven corrections that are normally caused by a shock. Among them the tariff-driven growth scare in 2018/19, rate hikes in 2022, and the regional bank crisis in 2023 – none of which led to a recession. Asia stock check Asian stock markets sold off sharply last week but pared some losses following the US administration’s partial tariff reprieve. Export-oriented markets like Taiwan, Korea, and Japan have faced a particularly choppy time. In mainland China, initial price declines were followed by a mild rebound supported by sentiment that the market is still underpinned by a ‘policy put’. In India, which cut rates by 0.25% last week, the impact on stocks was more moderate given its more limited foreign trade exposure. Near-term, some Asia investment specialists think heightened trade uncertainty and the unpredictable impact on the macro outlook will weigh on sentiment. While Asian consensus profit forecasts have trended higher since mid-Q1, the implementation of tariffs could cause downgrade pressure once their impact is clearer. Those with higher overseas trade and revenue exposure to tariffs and counter-tariffs could be particularly vulnerable. Despite this, Asian markets continue to trade at a material discount to developed markets. And while FX volatility and growth concerns have risen, many EM Asian central banks look well-positioned to ease policy amid a benign inflation outlook. Past performance does not predict future returns. The level of yield is not guaranteed and may rise or fall in the future. For informational purposes only and should not be construed as a recommendation to invest in the specific country, product, strategy, sector, or security Any views expressed were held at the time of preparation and are subject to change without notice. Index returns assume reinvestment of all distributions and do not reflect fees or expenses. You cannot invest directly in an index. Any forecast, projection or target where provided is indicative only and is not guaranteed in any way. Source: HSBC Asset Management. Macrobond, Bloomberg. Data as at 7.30am UK time 11 April 2025. Key Events and Data Releases Last week The week ahead Source: HSBC Asset Management. Data as at 7.30am UK time 11 April 2025. For informational purposes only and should not be construed as a recommendation to invest in the specific country, product, strategy, sector or security. Any views expressed were held at the time of preparation and are subject to change without notice. Market review Risk assets traded in a volatile fashion amid continued global trade uncertainty, with the US dollar falling against major currencies. US Treasuries weakened, and the US yield curve “bear steepened” following benign US core CPI data. Meanwhile, US IG and HY corporate spreads continued to widen. Among developed markets, US equities rebounded in choppy trading, while the Russell 2000 underperformed. European stock markets experienced broad-based weakness, as Japan’s Nikkei 225 pared losses after heavy sell-offs earlier last week. EM equities lagged developed markets. Other Asian stock markets remained on the defensive, with the Hang Seng leading the losses upon returning from a holiday-shortened week. In Latin America, equity market movements in Brazil and Mexico were more moderate. In commodities, oil fell, while copper and gold rallied. https://www.hsbc.com.my/wealth/insights/asset-class-views/investment-weekly/sticky-bond-yields/
2025-04-11 07:04
Key takeaways RBI cut the policy repo rate by 25bp to 6.0%, and changed stance from neutral to accommodative; it also gave implicit assurance of lasting surplus liquidity, and further rate easing. Inflation forecast was cut with the RBI saying that inflation is durably aligning with target; growth forecasts were also trimmed, and we believe can be cut more. We expect another 25bp rate cut in June and August, taking the policy rate to 5.5%, which is our estimate of neutral. In line with our expectation, the RBI cut the policy repo rate by 25bp, taking it to 6.0%.This was a unanimous decision across all six MPC members. It also changed its stance from neutral to accommodative, which we believe clearly signals further rate cuts (more below). The backdrop of this policy meeting was complex.The USA has recently announced a 26% tariff on India. We calculate that India’s GDP growth could take a direct 0.5ppt hit in FY26. The indirect and second-order negative impact could also be meaningful. But heightened volatility in global financial markets suggest that steps to support growth at this juncture should be carefully calibrated and remain focused on preserving macro stability alongside. We believe, the RBI signalled very clearly that it is focused on supporting growth. Certain points stood out to us: One, we think the RBI gave a double assurance that more rate cuts are coming. It changed stance and also cut growth/inflation forecasts, both steps signalling more easing. Two, it clarified that the accommodative stance only refers to policy rate, and not liquidity. This to us means that rate easing will happen on its own right, and not be substituted by liquidity easing. Three, on liquidity, the governor reiterated that the RBI “is committed to provide sufficient system liquidity”. In the press conference he even suggested that around 1% of deposits in liquidity could be available on tap. It is well known that liquidity has swung from deficit in January to a clear surplus. And this surplus is likely to continue, and even get a shot in the arm when RBI dividend is paid out in May. Four, on inflation, the governor said that “there is now a greater confidence of a durable alignment of headline inflation with the target of 4 per cent over a 12-month horizon”. The RBI lowered the FY26 inflation forecast from 4.2% to 4.0% on the back of a “durable softening of food inflation”. We have not seen such confidence on durability for the last few years. Five, on growth, the FY26 forecast was lowered from 6.7% to 6.5%. The governor said that quantification of trade war impact is tough at this point. In fact, in a supporting publication, we clearly noticed that the world growth forecast for 2025 hasn’t yet beenlowered much (3.1% versus 3.3% previously). This means there is likelihood of further growth forecast cuts in subsequent meetings. Six, it reiterated strong external accounts. This is important, because it provides some room to ease, even if external volatility is high. Another way to look at it is to say that the USDINR had gone close to 88 in the recent past, but has pulled back since then. Even if it weakens from current levels (of 86.6 as we write), for some distance, it will only go to levels seen recently, and may not be immediately disruptive. Having said the above, the RBI tried to strike a balance, lest expectations of rate easing become excessive.The RBI revealed its inflation forecast for FY27 at an above-target 4.3%, and growth too, at a higher 6.7% (compared to FY26). This message, that inflation over time can breach the 4% target, should help keep a check on expectations of extreme rate cuts. What next? With growth falling below potential, and inflation below target in FY26, we expect further easing. We are calling for a 25bp rate cut in the June and August meetings, taking the policy rate to 5.5%, which is our estimate of neutral. If growth expectations continue to remain weak, policy rate may even dip below neutral, though that’s not our central forecast. Finally, several reviews are going on, for example the RBI’s liquidity framework and the economic capital framework. These will need to be watched carefully for incremental information over the foreseeable future. https://www.hsbc.com.my/wealth/insights/market-outlook/india-economics/focuses-on-growth-support-amid-tariff-storm/
2025-04-11 07:04
Key takeaways The surprise 90-day reprieve from reciprocal tariffs for most countries has caused a sharp recovery in risk appetite. But uncertainty remains elevated and has now arguably been extended. The main positive is that a potential financial meltdown has been averted, and the all-important Treasury market should recover. Markets may now start to trade on fundamentals again. But global growth, US inflation and global earnings are all facing some challenges. Markets may no longer assume a US recession as their base case, but it remains a risk. As a result, we keep our defensive stance, focused on quality and diversification. We focus on multi-asset strategies with an active approach as managers can take advantage of opportunities and dislocations when they occur (without the need to forecast everything). We favour quality assets with stable cash flows – which include high rated bonds and defensive stocks with strong market positions. As for Chinese markets, our focus on domestically oriented companies is even more important now than before. We expect to see more stimulus that benefit the consumer discretionary and financials sectors in Asia, as well as internet, software and e-commerce leaders but think technology hardware companies are significantly exposed to US tariff and growth risks. What happened? The Liberation Day announcement on 2 April triggered a 13% sell-off of the S&P 500, but markets bounced sharply yesterday, reducing the damage to ‘just’ 4% from the 1 April closing price. Non-US markets are also bouncing. The trigger was yet another surprise announcement by the White House that most countries will be given a reprieve of 90 days on the reciprocal tariffs, meaning that the 10% blanket levy now applies to most countries. The (very important) exception is for imports from China, which saw their tariff raised further, to 125%; China’s own tariff of 84% on US imports comes into force today. Many commentators now assume trade between the US and China will collapse. While the US President did acknowledge the market turmoil, we think it would be too optimistic to assume that there is some kind of ‘government put’ protecting us against equity market downside. Tariffs have only been delayed and significant concessions from other countries will be needed to avoid them being imposed in 90 days time. The question is whether countries are willing and able to give in to the high US demands. The main positive is that fears of a financial market meltdown should now ease. The Federal Reserve’s intervention through Treasury purchases or liquidity measures no longer seems needed for now. Volatility has come down and Treasury markets have recovered sharply. It also means, however, that markets no longer expect four or five rate cuts this year, but only three, which aligns with our assessment. We think investors will start to look at growth, inflation and earnings fundamentals again. In fact, US consumers had already started to worry about signs of some weakening in the labour market and a re-acceleration of inflation as a result of the tariffs. The 125% tariff on Chinese imports will have a big effect on consumer prices. For companies, not every import from China can easily be substituted by another provider. Even if the final good can be made locally or outside of China, some of the components may still need to be sourced from China. As a result, growth and inflation pressures remain. Uncertainty is another negative as it delays investment and spending decisions, and – unfortunately – that uncertainty is further extended due to the 90-day reprieve. Overall, we think markets will no longer assume a US recession as their base case, but it remains a risk. And we believe that companies will start to guide down earnings expectations more actively, which should hurt cyclicals vs defensives, goods vs services, and big importers compared to more local players. Weak confidence will spill over into weaker activity Source: Bloomberg, HSBC Global Private Banking and Wealth as of 10 April 2025. We think US growth and earnings continue to be more negatively affected by the tariffs than in Europe, Japan and India, for example. That’s to a large extent because of the very broad-based tariffs, which mean that US importers cannot find any imports without levies. That increases their cost base, margin pressures and inflation pressures. Companies elsewhere in the world on the other hand can find plenty of goods without tariffs. We also believe that foreign companies and countries will continue to build regional networks to secure new suppliers and new markets. The announcement by the UK and India that they are in the final stages of a trade deal is just one example. Investment implications Investors who try to time the market have been shown that this is very difficult to do. Panic-driven moves may have led some people to sell on Tuesday and miss the rally on Wednesday. Once again, volatility spikes do not tend to last long. The strongest days often follow the weakest days, and investors better stay in the market to avoid missing those bounces. Diversification and a focus on quality are a much better strategy. We focus on multi-asset strategies with an active approach as managers can actively take advantage of opportunities and dislocations when they occur (without the need to forecast everything). We favour quality assets with stable cash flows – which include high rated bonds and defensive stocks with strong market positions. High yield bonds are less preferred as spreads look somewhat tight compared to their usual relationship with equity volatility. As for Chinese markets, our focus on domestically oriented companies is even more important now than before. That said, China’s onshore and offshore equity markets have stayed relatively resilient as compared to the sharp selloff in the US market in recent weeks. Many investors don’t know that the MSCI China has only very limited exports goods sales exposure to the US at only 2% (exports to the US account for only 2.5% of China GDP). We expect severe tariff headwinds to prompt the Chinese government to further ramp up fiscal and monetary stimulus to strive for its 2025 GDP growth target of “around 5%”. The DeepSeek-driven AI innovation and investment boom should offer an important domestic growth engine to mitigate the impact from reciprocal tariffs. We like the domestically-driven sectors of consumer discretionary and financials in Asia but think technology hardware companies are significantly exposed to US tariff and growth risks. https://www.hsbc.com.my/wealth/insights/market-outlook/special-coverage/90-day-tariff-reprieve-can-the-bounce-last/
2025-04-11 07:04
Key takeaways The Reserve Bank of India (RBI) cut the policy rate by 0.25%, bringing the benchmark interest rate to 6.0%. The RBI also changed the monetary policy stance from “neutral” to “accommodative”. The latest meeting reinforces our view that the RBI is likely to cut rates to 5.5% this year, with a 0.25% cut each in its June and August meetings. The central bank cut its FY26 (April 2025-March 2026) GDP growth forecast by 0.2% to 6.5%. It also lowered its inflation forecast to 4.0% (from 4.2% earlier). We retain our overweight stance on Indian equities, while acknowledging the increase in downside risks. Stabilisation in earnings expectations, undemanding valuations and improvement in international flows support the markets for now. The 90-day pause in the implementation of reciprocal tariffs is a positive for export-oriented sectors, though uncertainty is likely to persist. We prefer large-cap over small- and mid-cap equities and favour the financials, healthcare and industrials sectors. We also expect Indian local currency bonds to outperform cash this year. However, less favourable interest rate differentials and the risk of a rebound in the broad USD index (DXY) point towards increased downside risks for the INR. What happened? In line with our expectations, the Reserve Bank of India (RBI) cut the policy rate by 0.25%, bringing the benchmark interest rate to 6.0%. The RBI also changed the monetary policy stance from “neutral” to “accommodative”. Importantly, the decision to cut rates and change the policy stance was unanimous. The RBI governor clarified that the change in stance to accommodative meant that the central bank could cut rates further and this should not be interpreted as a signal for altering liquidity conditions. The governor also highlighted the RBI’s commitment to ensure sufficient liquidity in the financial system. Ongoing decline in food inflation opens room for the RBI to cut rates further Source: RBI, HSBC Global Private Banking and Wealth as of 10 April 2025 It is important to note that the RBI Monetary Policy Committee (MPC) meeting was held prior to US President Trump’s announcement to pause the implementation of the reciprocal tariffs by 90 days. Clearly, the potential impact on growth due to tariffs (which still stand at 10%) heightened financial market volatility and the potential negative second-order impact weighed on the RBI’s decision. The central bank cut its FY26 (April 2025-March 2026) GDP growth forecast by 0.2% to 6.5%. The governor also mentioned that it is tough to quantify the impact of the trade war. Hence, we acknowledge the risk of further downward revision in GDP growth estimates should uncertainty persist. On a positive note, the RBI also lowered its inflation forecast to 4.0% (from 4.2% earlier), aided by the durable decline in food inflation. We expect the near-term food inflation to remain subdued due to the good winter harvest. However, the upcoming months are expected to see prolonged periods of elevated temperature, which could impact crop production and raise the risk of a rebound in food inflation in 2H 2025. Overall, the latest meeting reinforces our view that the RBI is likely to cut rates to 5.5% this year, with a 0.25% cut each in its June and August meetings. That said, given the heightened global uncertainty, it is possible that the timing of the rate cuts could be fluid. Investment implications In our assessment, the RBI meeting was a positive for the domestic equity markets from two aspects. First, the 0.25% rate cut should lead to marginally lower borrowing costs for companies. Secondly, the forward guidance on rate cuts and liquidity is likely to provide greater confidence to markets that the central bank is increasingly looking to support growth, given that inflation has moderated and is close to the RBI’s target of 4.0%. We retain our overweight stance on Indian equities, while acknowledging the increase in downside risks. Stabilisation in earnings expectations, less demanding valuations and improvement in international flows support the markets for now. The 90-day pause in the implementation of reciprocal tariffs is a positive for export-oriented sectors, though uncertainty is likely to persist. From a style perspective, the heightened uncertainty reinforces our preference for large-cap equities over small- and mid-cap. We believe their size, better access to financing and defensive nature could lead them to outperform over the next few months. We are selective and prefer domestic and service-oriented sectors, which are less exposed to tariffs. We favour the financials, healthcare and industrials sectors. We are bullish on Indian local currency bonds and expect them to outperform cash in 2025. The supply-demand dynamics remain supportive, as lower projected net supply for FY26, coupled with robust domestic and international demand, should lead to lower yields. Given expectations of further RBI rate cuts, we expect 10-year government bond yields to edge lower by end-2025. On a relative basis we see better value in AAA corporate bonds, owing to the recent spread widening. However, less favourable interest rate differentials and the risk of a rebound in the broad USD index (DXY) point towards increased downside risks for the INR. https://www.hsbc.com.my/wealth/insights/market-outlook/special-coverage/rbi-hints-at-continued-policy-support/
