Informist, Friday, Mar 31, 2023
By Aiswarya Santhosh
MUMBAI – On the last trading session of the current financial year, the rupee ended at a three-week high against the dollar due to a surge in the domestic equity indices and as some banks sold the greenback on behalf of exporters, dealers said.
After trading in a range of 18 paise through the day, the rupee ended at 82.1650 a dollar compared with 82.3375 a dollar on Wednesday. The domestic financial market was shut on Thursday on account of Ram Navami.
The rupee opened sharply higher at 82.1200 a dollar as the dollar index fell to a one-week low on Thursday, dealers said. The dollar index fell as the euro rose sharply after data showed that the fall in consumer prices in Germany for March was less than expected. Separately, data also showed that consumer prices in Spain rose 3.3% annually in March.
Meanwhile, data on Thursday showed that the number of Americans filing new claims for unemployment benefits in the US rose moderately last week.
Initial claims rose by 7,000 to 198,000 in the week ended Saturday against the market expectation of an increase to 195,000 for the week, highlighting that aggressive rate hikes are taking time to seep into the tight labour market in the country.
Market participants now await the US core personal consumption expenditure data, the preferred gauge for inflation for the Federal Reserve, for further clarity on the central bank’s monetary policy. The data will be released later today.
Economists polled by Reuters have projected February personal consumption expenditure inflation to show an annual increase of 4.7%, down from 5.4% in January.
Soon after opening, the Indian unit rose to the day’s high of 82.0850 a dollar due to a surge in the domestic share indices, dealers said. Domestic equities rose sharply tracking gains in global markets. Indices in the US closed higher on Thursday after data showed higher-than-expected increase in fresh claims for unemployment, raising hopes that the Fed will slow down on interest rate hikes.
The Nifty 50 and the Sensex were closed higher at 1.6% and 1.8% respectively.
More than halfway into the session, the Indian currency erased some of its gains and touched the day’s low of 82.2625 a dollar as banks persistently bought the greenback for oil marketing and importers noting the lower dollar/rupee levels.
“Oilers and importers were buying (dollars), some selling (dollars) was there, but most exporters were not there today,” said a dealer with a private bank.
Moreover, the dollar index recovered during European trade ahead of the US core personal consumption expenditure data due later today, which also limited gains for the Indian currency. At 1622 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 102.45 as against 102.20 on Thursday. It was at 102.64 on Wednesday.
However, some banks sold dollars for exporters who wanted to convert their dollar holdings accumulated over the quarter before closing their books at the 82.20-82.25 a dollar level. This provided support to Indian currency. However, dealers said that most exporters were waiting for higher dollar/rupee levels to sell the US unit.
Dealers also said that banks likely sold the greenback for foreign portfolio investors into domestic equities, which further aided the Indian unit.
Today, the government announced India’s new foreign trade policy, effective from Saturday. “With the trade policy targeting exports of $2 trln by 2030 the Government and RBI may not be interested in too much gains for the rupee and may like to keep it stable to weak, particularly with the turbulent world economy,” said Anil Kumar Bhansali, Head of Treasury, Finrex Treasury Advisors LLP.
FORWARDS
Premiums on dollar/rupee one-year forward contracts rose slightly as gains in the rupee prompted banks and importers to buy dollars for forward delivery, dealers said.
The premium on the one-year dollar/rupee contract was 195.96 paise, against 195.01 paise on Wednesday. On an annualised basis, the premium was at 2.38%, against the previous close of 2.36%.
Volumes and movement remains subdued today as traders refrained from taking large bets due to lack of significant cues.
OUTLOOK
Market is shut on Saturday. On Monday, the rupee will take cues from overnight movement in the dollar index after the release of US core personal consumption expendiure data due later today. Dealers said that the Indian currency will also take cues from overnight movement in crude oil prices.
“Rupee will likely trade in the range of 82.00-82.50 going forward, next major factor is the RBI MPC (Monetary Policy Committee) meeting in April, where there is a chance that RBI may not hike the rate,” said a dealer with a private bank.
Dealers have pegged the next technical resistance for the rupee at 82.00 a dollar. The currency is expected to move in the range of 82.00-82.50 a dollar during the day.
India Rupee – World FX: Dlr recovers ahead of key US data; yen gains
MUMBAI – The dollar index recovered ahead of the release of data on US core personal consumption expenditure for February later today.
Economists polled by Reuters projected February personal consumption expenditure inflation–the US Federal Reserve’s preferred inflation gauge print–to show an annual increase of 4.7% against 5.4% in January. Consumer price rise may also slow to 0.4% on month from 0.6% in January.
The index had incurred losses on Thursday tracking a rise in the euro after the release of CPI data for Germany. Data on Thursday showed that although inflation eased significantly in Germany in March, it was stronger than expected, adding pressure on the European Central Bank to tighten its monetary policy further.
At 1449 IST, the dollar index, which measures the strength in the greenback against a basket of six major currencies, was at 102.41 as against 102.20 on Thursday. It was at 102.64 on Wednesday.
Meanwhile, the yen rose 0.5% against the greenback after data showed that industrial production and retail sales in Japan rose sharply in February, although this also coincided with a rise in unemployment in the country.
The euro fell 0.2% against the dollar today, and the pound sterling was also down 0.2% against the greenback. (Aiswarya Santhosh)
India Rupee: Erases some gains as bks buy dlrs for importers, dlr up
MUMBAI – The rupee erased some gains against the dollar as banks bought the greenback on behalf of importers, dealers said.
“There is buying (dollars) at these levels, however some selling (dollars) is there but not much like expected,” said a dealer with a state-owned bank.
A slight rise in the dollar index during Europe trade ahead of the release of the US core Personal Consumption Expenditure data for February due later today also weighed on the currency.
Economists polled by Reuters projected February personal consumption expenditure inflation–the US Federal Reserve’s preferred inflation gauge print–to show an annual increase of 4.7% against 5.4% in January. Consumer price rise may also slow to 0.4% on month from a 0.6% increase in January.
According to the CME FedWatch tool, market participants are factoring in a 50% chance of the US Fed hiking its benchmark policy rate by 25 basis points in May.
At 1342 IST, the dollar index, which measures the strength in the greenback against a basket of six major currencies, was at 102.40 as against 102.20 on Thursday. It was at 102.64 on Wednesday.
Dealers said some banks sold the greenback for exporters, who wanted to convert their dollar holdings accumulated over the quarter before closing their books at the 82.20 a dollar level. This supported the Indian currency.
Dealers said that a sharp rise in the domestic share indices also supported the Indian unit. At 1324 IST, the Nifty 50 and the Sensex were up 1.4% and 1.5%, respectively. (Aiswarya Santhosh)
India Rupee – Asia FX: Most up as dollar index falls, Asia shrs rise
MUMBAI – Most Asian currencies rose against the dollar today as the dollar index fell on Thursday. The index fell tracking a sharp rise in the euro after the release of German inflation data.
Data on Thursday showed that although inflation eased significantly in Germany in March, it was stronger-than-expected, adding pressure on the European Central Bank to tighten its monetary policy further.
Meanwhile, data on Thursday showed initial claims for state unemployment benefits in the US rose by 7,000 to 198,000 in the week ended Saturday, against the market expectation of an increase to 195,000 for the week, highlighting that aggressive rate hikes are taking time to seep in to the tight labour market in the country.
At 1022 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 102.20 as against 102.17 on Thursday. It was at 102.64 on Wednesday. The index fell to a low of 102.05 earlier today.
Asian currencies were also aided by rise in the Asian share indices in early trade today. Asian shares rose tracking the Wall Street, which gained overnight due to expectation that the US personal consumption expenditure will slow down in February.
The yuan rose 0.2% against the greenback after data showed that China’s official manufacturing purchasing managers’ index was stronger than expected for March. However, it still fell to 51.9 in March, down from 52.6 in February. (Aiswarya Santhosh)
India Rupee: Sharply up as dollar index falls, domestic shares surge
MUMBAI – The rupee rose sharply against the greenback today as the dollar index fell on Thursday, tracking a sharp rise in the euro, dealers said. The euro soared after the release of the German inflation data, which showed that although inflation eased significantly in Germany in March, it was still stronger than expected, putting pressure on the European Central Bank to further tighten its monetary policy.
Market participants now await the US Core Personal Consumption Expenditure data for February, due later today, for further cues on the Federal Reserve’s monetary policy path going ahead. Economists polled by Reuters have projected the personal consumption expenditure inflation data, the Federal Reserve’s preferred inflation gauge, to show an annual increase of 4.7%, down from 5.4% in January.
At 0822 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 102.16 as against 102.17 on Thursday. It was at 102.64 on Wednesday. The index fell to a low of 102.05 earlier today.
A surge in domestic share indices also aided the Indian unit, dealers said. At 0935 IST, the Nifty 50 and Sensex were up by over 1% each.
Banks may sell the greenback for exporters who wanted to convert their dollar holdings accumulated over the quarter before closing their books at the 82.25-a-dollar level, dealers said. “There will be inflows (dollars) as today is the year-end, so the rupee may go up to the 82.95 levels,” a dealer with a state-owned bank said.
Dealers have pegged the next technical resistance for the rupee at 82.00 a dollar. The rupee is expected to move in the range of 81.90-82.50 a dollar for the rest of the day, dealers said. (Aiswarya Santhosh)
India Rupee: Expected range for rupee – Mar 31
MUMBAI – Following are the expected support and resistance levels for the rupee today, as forecasted by leading banks and brokerages in an Informist poll:
(Aiswarya Santhosh)
End
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Aditya Sakorkar
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