The Morning Edge: The Dollar’s Grip on Global Reserves Loosens

The US dollar’s dominance is quietly eroding. For years, central banks have been quietly chipping away at their dollar holdings, diversifying their reserves in a slow but steady shift away from the greenback. The latest International Monetary Fund data reveals that the dollar’s share of global FX reserves fell to a record low of 57.3% in July-September last year—down from over 72% in 2001. However, in a rare reversal, it edged up slightly to 57.8% in October- December, thanks to a 7.6% surge in the dollar’s value against major currencies—its biggest quarterly jump in nearly a decade. While the move temporarily inflated the dollar’s share, the long-term trend stays clear: global reserve managers are seeking alternatives, and the dollar’s dominance is facing an increasingly diversified future.

Data
The Institute for Supply Management manufacturing PMI fell to 49.0 in March from 50.3 in February, slipping back into contraction territory (below the fifty threshold) and missing economists' 49.5 forecast, while factory gate inflation hit a near three-year high. The sector, representing 10.2% of the US economy, showed growing strain as ISM survey respondents cited tariffs as a key concern. Meanwhile, the labour market cooled, with job openings dropping by 194,000 to 7.568 million in February (JOLTS data), signalling that trade uncertainty may be dampening hiring demand.

Markets
Overnight
US stocks closed higher on Tuesday in a choppy session, with technology stocks staging a comeback ahead of impending US tariff announcements. The Nasdaq gained 1.2%, lifted by rebounds in key tech players: Tesla surged 3.6% before its quarterly delivery report, while Amazon, Microsoft and Meta advanced 1-1.8%. However, the S&P 500's more modest 0.5% rise was held back by sharp declines in healthcare, with Johnson & Johnson tumbling 7.6% and dragging the sector down 1.8% – the worst performer among the benchmark's 11 sectors. As markets oscillate between tariff anxieties and sector rotations, this tech-led recovery faces scrutiny amid lingering concerns about inflation and economic growth.

US Treasury yields fell sharply across the curve, with the 10-year note dropping 8 basis points to 4.165%, as traders sought safety in government bonds. The yield curve flattened notably, with long-end yields falling 9 basis points in a bull-flattening move that signal growing economic concerns. With Trump expected to unveil new trade barriers on Wednesday, markets remained directionless - caught between tariff fears and hopes for clarity. The flight to Treasuries suggests investors are preparing for potential turbulence as the administration reshapes global trade dynamics.

The US dollar extended its weak run on Tuesday, building on its worst first-quarter performance in nine years with a near 4% decline against major currencies. Investor caution toward US assets has intensified, driving demand for traditional safe havens like the Japanese yen up 0.25% to 149.57 per dollar. The euro dipped 0.25% to $1.079, while the dollar index eked out a 0.04% gain—offering little relief after its recent rout. With the greenback’s struggles persisting, currency traders remain braced for further volatility ahead.

Brent crude oil prices softened on Tuesday as traders assessed the dual threats of reciprocal tariffs and potential new US sanctions targeting Russian crude. Brent crude futures declined 0.37% to settle at $74.49 a barrel, reflecting cautious positioning ahead of possible supply disruptions. The modest pullback comes despite heightened geopolitical risks, suggesting markets remain torn between Trump's aggressive trade rhetoric and actual physical supply conditions.

Day’s Ledger

Economic Data:

• India March S&P Global Manufacturing PMI Data
• US March ADP Non-farm Employment Data
• US February Factory Orders Data
• US Weekly Crude Oil Inventories Data

Corporate Actions:

• Baroda Extrusion to consider preferential isue of shares
• Colab Platforms to consider stock split
• Super Crop Safe to discuss right issue of equity shares

Policy:

• Trump to announce reciprocal tariffs
• ECB's Schnabel Speaks  
• ECB's Lane Speaks  

Tickers

• COAL INDIA board approved a coal price increase of ₹10 per tonne, effective April 16.
• GODAWARI POWER & ISPAT’s Boria Tibu iron ore mines temporarily shut due to expired mining plan approval.
• HINDUSTAN COPPER achieved record annual ore production of 2.73 million tonnes in FY25, exceeding 103% of the target.
• JSW ENERGY added 3.6 GW capacity in FY25, reaching 10.9 GW total capacity.
• MARUTI SUZUKI INDIA’s March production rose 16.9% YoY to 194,901 units.
• MOIL increased prices of manganese ore by 3%, effective April 1.
• NMDC’s March iron ore production fell 27% YoY to 3.55 MT.
• POLYCAB INDIA received a ₹850 million tax demand from the Income Tax Department for FY23.
• POWER GRID CORPORATION OF INDIA informed that the company is declared successful bidder for an inter-state transmission project in Madhya Pradesh.
• SHRIRAM FINANCE got RBI’s approval for 100% acquisition of Shriram Overseas Investments.
• SIEMENS informed that NCLT, Mumbai, approved the demerger of its energy business to Siemens Energy India.
• SJVN’s subsidiary SJVN Green Energy completed trial run of 241.77 MW in Phase-I of Bikaner Solar Project.
• TATA CONSUMER PRODUCTS received a tax demand of ₹26.21 billion for FY22.
• TATA STEEL acquired 12.49 million equity shares in IFQM for ₹1.25 billion.
• VAIBHAV GLOBAL received a draft assessment order from the Income Tax Department proposing adjustments of ₹20.49 billion for FY23.
• ZAGGLE PREPAID OCEAN SERVICES signed a one-year master services agreement with Truecaller International.

Must Read

• India finalises US trade deal terms, Trump says Delhi ‘dropping’ tariffs
• MFI loans down 41% in December quarter, NPAs zoom
• India likely to dial down plans to curb personal computer imports
• Govt to form panel to decide on MTNL, BSNL assets in Mumbai: Scindia
• BJP likely to get new party president in April: Report
• Warming earth drives surge in demand for electricity
• China kicks off military drills near Taiwan, warns island’s ‘independence’ means war
• White House considering roughly 20% tariff on most imports, report says
• Fed's Goolsbee: Hard data shows economy is solid, but there is fear around tariffs

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