Currency markets focused on the yen on Monday following a sharp drop last week that spurred speculation of a rate check from Tokyo, while investors pondered interest-rate outlooks after a wave of hikes from major central banks last week.

The yen was a touch firmer at 156.64 per US dollar after dropping 2% last week. Japan markets were closed for a three-day holiday, leading to low liquidity while keeping traders on alert for an official intervention to prop up the volatile currency.

The Bank of Japan raised rates on Friday to their highest level in 31 years to 1.25%, yet the widely expected move did not boost the yen as two dissenting votes and a lack of explicitly hawkish guidance disappointed investors.

That led to the yen sharply declining before the Nikkei newspaper reported that Japanese officials conducted rate checks. A rate check involves authorities asking banks for currency quotes to gauge market conditions, which traders view as a precursor to currency intervention.

Apart from the BOJ, the Federal Reserve and the European Central Bank raised rates this month, with both warning further tightening might be needed to tackle inflation due to the almost seven-month-long war in the Middle East.

Fred Neumann, chief Asia economist at HSBC, said the BOJ’s messaging has become all the harder because the Fed delivered a hawkish signal with its unanimous decision to raise its policy rate.
The yen had firmed to its strongest level in seven months in early September as traders wagered on a faster pace of BOJ hikes and early signs of repatriation by Japanese investors but has since surrendered some of those gains.”The bar thus remains high for the BOJ to convince markets of its hawkish tilt and anchor expectations when it comes to the yen,” Neumann said. “In the coming weeks and months, investors may again test the resolve of the BOJ to push rates higher and match the Fed’s tightening.”

The euro was little changed at $1.1482 after voting projections showed the far-right Alternative for Germany (AfD) took first place in state elections in northeastern Germany, in a blow to Chancellor Friedrich Merz’s conservative party.

ING economists said the results clearly echo the low popularity of the entire federal government, and of Chancellor Friedrich Merz in particular.

“Years of economic stagnation helped produce that fragmentation. Now the fragmentation will make the stagnation harder to escape,” they said in a note.

The dollar index, which tracks the US currency against six major peers, was steady at 100.23 after gaining more than 1% last week following the Fed’s rate hike, as the central bank signalled more increases could be coming.

Traders are currently pricing in a 55% chance of a rate hike at the Fed’s next meeting in October, up from 42.5% a week earlier, the CME FedWatch tool showed.

“We do not think that the midterm elections are going to be a limiting factor in the Fed delivering another hike in October,” said Thomas Simons, chief US economist at Jefferies.

“Whether there is another hike in December will come down to the data and geopolitical developments. Looking to 2027, the path of rates will come down to what happens with the labor market. We would say rate cuts are likely in second half of 2027.”

In other currencies, sterling last bought $1.339 in early trading. The Australian dollar fetched $0.7129, while the New Zealand dollar was at $0.5721.

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Seven mainboard and 13 SME initial public offerings (IPOs) are scheduled to open for subscription between September 21 and 25, extending the momentum in the primary market fundraising. The 20 issues have a combined issue size of around ₹4,152 crore.

This follows five mainboard and six SME IPOs that opened for subscription last week, with a combined issue size of around ₹24,563 crore. NSE’s ₹22,561-crore IPO-the largest this year-is set to close on Monday. The issue has been fully subscribed. Among the mainboard issues this week, Elevate Campuses’ ₹2,100 crore IPO will be the largest. All the other issue sizes are below ₹1,000 crore.

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Listings

The week will also see six mainboard and eight SME companies that launched their IPOs last week list on the exchanges.
Among the mainboard companies, Manika Plastech will list on September 21, while SS Retail, Hero Motors and Jindal Supreme India will list on September 23. NSE and Sonaselection India will list on September 24.

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Among SME companies, Injecto Polymers and Century Business Media will list on September 21. Vama Wovenfab, Shakti Polytarp and Quanto Agroworld will list on September 22, followed by SpectrA Technology Solutions and Kheria Autocomp on September 24 and Axiom Gas Engineering on September 25.

ET Intelligence Group: Even as net additions to systematic investment planning (SIP) accounts touched a six month high in August, the year-on-year rate of increase remained volatile amid a higher pace of SIP discontinuations. The number of discontinued SIPs, though lower than fresh additions, rose at a faster rate for the fourth consecutive month in August, according to the data from Association of Mutual Funds in India (AMFI). Discontinued SIPs rose 31% year-on-year compared with a 20% increase in new SIP registrations. As many as 53.8 lakh SIPs were either discontinued or matured in August, against 66.4 lakh new SIP registrations. In the first five months of the current fiscal, a total of 2.9 crore new SIPs were registered, while 2.6 crore SIPs were discontinued or matured.

The growth in contributing SIP accounts has also moderated, suggesting that rising discontinuations are beginning to offset a part of fresh additions. Contributing SIP accounts do not include folios that paused investments for the month. After declining marginally by 85,000 in May, contributing SIP accounts increased by 14.2 lakh in June, but the incremental addition fell to 11.9 lakh in July and further to 11.6 lakh in August. Contributing accounts reached 10 crore in August, up from 9.9 crore in July.
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Monthly net SIP account additions have increased since May after falling by nearly 58,000 in April. Net additions rose to 12.6 lakh in August from 11.1 lakh in July, 4.9 lakh in June and 2.5 lakh in May.

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Net SIP inflow rose 21% year-on-year to ₹32,297 crore in August. SIP inflow has remained in the ₹31,000-32,000 crore range in FY27 so far. Total SIP inflow reached ₹1.6 lakh crore during April-August, implying a year-on-year increase of 15%.

Mumbai: After remaining buyers for about five fortnights, overseas investors again turned sellers in the first half of September, with financials, auto, oil and gas and FMCG seeing the biggest selling. Healthcare witnessed the highest inflows in the period, reflecting the defensive tilt in their near-term outlook for Indian equities.

Foreign portfolio investors sold nearly ₹14,116 crore during the first half of September across sectors, compared with buying of ₹13,000 crore in the second half of August and ₹16,621 crore in the first half of August.

“By and large, FII activity has been subdued in recent times, with stock-specific and sector-specific moves being witnessed in the market,” said Kranthi Bathini, director of equity strategy, WealthMills Securities. “Long-only FIIs are also staying on the sidelines due to the rise in crude oil prices, inflationary worries and geopolitical issues,” he said.

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Financial stocks saw the biggest selling at ₹6,204 crore during the period, after FIIs bought ₹3,959 crore worth of the stocks in the second half of August.

They further cut exposure to auto stocks worth ₹2,670 crore between September 1 and 15, after selling to the tune of ₹1,299 crore in the second half of August.
Read more: JioBlackRock CIO Rishi Kohli decodes Nifty’s inflection point after two years of weak returns“FPI selling in financials and automobiles was driven by both global caution and sector-specific concerns,” said Vishad Turakhia, CEO, Equirus Securities. “Financial stocks were hit the hardest because they form a large and liquid part of foreign portfolios, making them the first to be sold when investors reduce risk. Concerns over pressure on banks’ lending margins also led to profit-booking.”

In automobiles, Turakhia said demand remains healthy, but rising input costs and weaker export conditions have raised concerns that strong sales may not translate into equally strong profit growth.

Power stocks saw selling of ₹1,653 crore during the first half of September, compared with selling of ₹389 crore in the second half of August. Telecom and IT stocks saw selling of ₹991 crore and ₹960 crore, respectively, during the period.

Healthcare stocks attracted ₹2,114 crore of FPI buying, after seeing purchases worth ₹3,021 crore in the second half of August. Construction and services stocks saw buying of ₹930 crore and ₹905 crore.

“In the large-cap space, FIIs have been net sellers in the medium to short term, particularly in August and September. The moves have been positive in healthcare and auto ancillary, while FIIs have been buying domestic-centric sectors,” said Bathini.

Mumbai: National Bank for Financing Infrastructure and Development (NaBFID) is looking to raise $500 million through a 10-year bond, marking its debut in the overseas bond market, while separately holding talks with the Multilateral Investment Guarantee Agency (MIGA) to raise around $1 billion through a 15-year bond, people familiar with the development said.

The 15-year bond, which is expected to carry a MIGA guarantee, will help the development finance institution access longer-term overseas funding, a key requirement for a lender financing long-gestation infrastructure projects.

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“We are in the market to raise an indicative amount of $500 million, with a tenor of 10 years,” a company executive said.
NaBFID is targeting around $4 billion in dollar funding by December through a mix of loans and bonds, including the current $500 million bond and external commercial borrowings.

The institution is tapping the Reserve Bank of India’s concessional US dollar-rupee swap facility, which was operationalised in June to lower hedging costs for eligible overseas borrowings. The facility provides a concessional swap cost of 1.5% a year for eligible external commercial borrowings and overseas foreign currency borrowings, with drawdowns permitted until December 31.
Read more: JioBlackRock CIO Rishi Kohli decodes Nifty’s inflection point after two years of weak returnsThe cost advantage of overseas borrowing, however, has narrowed as US Treasury yields have risen. After factoring in the 1.5% swap cost, dollar borrowing costs are now closer to domestic bond market rates.

“About two months back the savings were quite substantial. Now it has almost come to the domestic bond market rates. It is slightly cheaper,” the executive said.

Bank of Maharashtra recently raised $500 million through a five-year US dollar bond at 130 basis points over US Treasuries, with a 6.112% coupon. Including the 1.5% swap cost, the effective cost would be around 7.6%, broadly in line with current domestic borrowing costs for comparable institutions.

The cost of NaBFID’s 10-year bond will depend on the prevailing US Treasury yield and the spread at which the issue is priced.

The proposed MIGA-backed borrowing will be a separate 15-year tranche of around $1 billion.

“That will be a 15-year tranche. And that will be almost a billion dollar,” the executive said.