Base metals jump up to 5% as dollar weakens; RBI hikes rates by 50 bps

Base metals futures at London Metal Exchange (LME) and Shangai Futures Exchange (SHFE) gained by up to 5.28% against the previous closing following improved sentiments in the market as the US dollar index ended down by nearly 1%, SteelMint learned.

RBI hikes interest rates by 50 basis points

As inflation continues to remain at elevated levels, the Monetary Policy Committee (MPC) has decided unanimously to increase the repo rates (the rate of interest charged by the central bank on the cash borrowed by commercial banks) by 50 basis points to 5.4% with immediate effect. Looking into the current scenario, the reverse repo rate (the rate at which the Reserve Bank of India borrows money from banks for the short term) may also increase. The current inflation in India is around 7.01%.

Base metals market performance - 4 August

LME 3-month copper gained by 0.65%, aluminium rose 1.05%, lead inched up 0.99%, zinc jumped the most by 5.28%, nickel decreased slightly by 0.55%.

SHFE copper gained 1.26%, aluminium jumped 1.43%, lead rose 0.17%, and zinc added 3.51%.

MCX aluminium rose 0.86%, lead rose 1.21%, zinc up by 4.30% and copper rose by 0.70% d-o-d yesterday.

Stock levels remain volatile

LME warehouse stocks of base metals remain fluctuating d-o-d basis in the last trading session. Copper and aluminum stocks fell by up to 1.32% yesterday and zinc stocks jumped by 4.59%. However nickel and lead stocks remained stable.

Oil prices down

Oil prices tumbled further below key levels, and were set for large weekly losses on an escalation in China-Taiwan tensions. However, the fall in oil prices may provide some relief to import-heavy countries struggling with inflation driven by high fuel prices, SteelMint understands.

Brent oil futures fell to $94.79 per barrel and crude oil WTI futures decreased to $89.33 per barrel at the time of reporting.

Currency exchange

The Indian rupee was at 79.22 against the US dollar. The dollar index, which gauges the value of the dollar in relation to a basket of six different currencies, hovered at around $105 at the reporting time.