The U.S. dollar weakened against the yen

Russian Rouble: The Russian rouble remained stable against the U.S. dollar following President Donald Trump's inauguration, trading at 100.75 per dollar. This stability is attributed to the absence of significant Russia-related announcements during the inauguration. Analysts from the Bank of St. Petersburg noted that geopolitical factors are not currently impacting the Russian foreign exchange market. The rouble has strengthened by approximately 10% since the beginning of the year, supported by increased foreign exchange sales by the state and rising oil prices, despite recent U.S. energy sanctions.

Indian Rupee: Indian importers utilizing the 'seagull' option strategy for hedging are facing challenges due to the rupee's sharp decline and increased volatility. Following President Trump's election victory, the rupee has depreciated by 3%, reaching an all-time low of 86.6475 per dollar. This depreciation has increased importers' costs by 1 to 1.5 rupees per dollar compared to simple forwards. Experts suggest revisiting risk management strategies in light of the heightened volatility.

U.S. Dollar and Japanese Yen: The U.S. dollar weakened against the yen, reaching a near one-month low at 155.2 yen. This movement is influenced by softer-than-expected U.S. economic data and growing confidence in a potential interest rate hike by the Bank of Japan (BOJ). Remarks from BOJ officials suggest a 79% chance of a 25-basis-point increase, with Japan's annual wholesale inflation steady at 3.8% in December. Additionally, U.S. retail sales rose by 0.4%, while unemployment benefit applications increased. The Philadelphia Fed Business Index surged unexpectedly, contrasting with the overall dip in the U.S. dollar index to 108.97. Market expectations are for the Federal Reserve to implement rate cuts this year, influenced by softer consumer price data and anticipation of President Donald Trump’s policies upon his return to the White House.