Informist, Monday, Apr 3, 2023
By Ananya Chaudhuri
NEW DELHI – The rupee ended sharply lower against the dollar today as crude oil prices surged over 5% after the Organization of Petroleum Exporting Countries announced a surprise output cut on Sunday, dealers said.
Today, after trading in a tight range of 13 paise throughout the day, the local unit settled at 82.3325 a dollar, compared with 82.1650 a dollar on Friday.
The Indian currency started the day sharply lower at 82.4500 a dollar against the US unit as crude oil prices soared due to supply concerns after Saudi Arabia and other OPEC+ announced on Sunday said they will cut oil output by 1.16 mln barrels per day, starting from May till the end of 2023.
The surprise announcement of output reduction could fuel inflation globally, dealers said. Investors are now closely monitoring the outcome of today’s virtual meeting of the OPEC ministerial panel, which includes Saudi Arabia and Russia, due for release later today. Investors expect the panel to stick to its 2-mln-bbl-per-day cut till the end of 2023.
The Indian unit started to pare some losses as banks stepped in to sell the greenback on behalf of exporters who wanted to take advantage of relatively higher dollar rupee level.
“Selling (of dollars) is only happening, because exporters were only looking for these levels, for last couple of days it hasn’t come down beyond 82.40-82.45 (a dollar). So, these levels are being booked by the exporters,” a dealer at a big state-owned bank said.
Moreover, back home, data showed on Friday that India’s current account deficit shrank to $18.22 bln in Oct-Dec from the previous quarter, supporting the Indian unit, dealer said.
A rise in domestic share indices also supported the local unit, dealers said. Today, the benchmark Nifty 50 and Sensex ended 0.2% higher each.
Dealers said some banks bought the US unit on behalf of importers which weighed on the Indian currency.
Majority of the trade time, the rupee traded in a tight range of 82.40-82.35 a dollar as traders avoided placing fresh bets due to lack of significant cues.
During the last leg of the trade, the rupee pared 12 paise of losses against the greenback as banks persistently sold dollars on behalf of exporters and moved to the day’s high of 82.3225 a dollar.
However, the Indian unit ended sharply lower against the dollar as crude oil prices continued to rise on fear about supply in European trade.
At 1629 IST, the June contract of Brent crude oil on the Intercontinental Exchange was at $84.00 a barrel, as against $79.89 a bbl on Friday. It was at $79.27 a bbl on Thursday. The prices rose as much as $86.44 a bbl in European trade.
“If you see Brent crude, the prices have gone significantly up. And it’s (crude oil prices) not going to come down any time soon because US wasn’t expecting this kind of production cut from the OPEC+ countries,” a dealer at a state-owned bank said.
The volume in the currency market was muted today, dealers said.
FORWARDS
Premium on the one-year dollar/rupee forward contract ended higher, tracking a fall in US Treasury yields on Friday, dealers said.
US Treasury yields slumped after data showed inflation moderated in February and also as investors bought bonds for quarter-end.
Premiums on forwards of a currency pair are reflective of the interest rate differential between the two countries.
The premium on the one-year dollar/rupee contract was 201.10 paise, against 195.96 paise on Friday. On an annualised basis, the premium was at 2.42%, as against the previous close of 2.38%.
OUTLOOK
Indian financial markets are closed on Tuesday on account of Mahavir Jayanti. On Wednesday, the rupee will take cues from overnight movement in the dollar index and crude oil prices, dealers said.
Traders are now waiting for the outcome of the Reserve of Bank of India’s Monetary Policy Committees’ three-day meeting scheduled to be released on Thursday, dealers said.
“I think, this whole week is going to be volatile. As we have a lot of data releases, and MPC meeting is also there,” a dealer at a big state-owned bank said. “This time market (participants) are not very sure whether they (RBI) will increase the rate or not, so in such cases, there can be movement (in dollar/rupee).”
Dealers have pegged the next technical resistance for the rupee at 82.10 a dollar. The currency is expected to move in the range of 82.10-82.60 a dollar during the day. (Ananya Chaudhuri)
India Rupee: Down but pares losses as banks sell dlrs for exporters
NEW DELHI – The rupee remained sharply lower against the dollar, though it pared losses as banks sold the greenback on behalf of exporters, dealers said.
“Exporters are selling at 82.45 (a dollar) level, that’s why it (rupee) has come up 10-15 paise,” a dealer at a foreign bank said.
Earlier in the day, the Indian unit fell to the day’s low of 82.4525 against the greenback.
Some dealers said banks also bought dollars on behalf of importers, which exerted pressure on the Indian currency.
A sharp rise in crude oil prices, after a surprise output cut by the Organisation of the Petroleum Exporting Countries also weighed on the Indian unit, dealers said. At 1332 IST, the June contract of Brent crude oil on the Intercontinental Exchange was at $84.24 a barrel as against $79.89 a bbl on Friday. It was at $79.27 a bbl on Thursday. The price rose to as much as $84.44 a bbl today.
Dealers said volumes in the currency market were muted. “It being the first day of financial year, we’re not seeing much volumes,” a dealer at a big state-owned said.
Dealers have pegged the next technical support for the rupee at 82.50 a dollar. The rupee is expected to move in the range of 82.10-82.60 a dollar for the rest of the day, dealers said. (Ananya Chaudhuri)
India Rupee: Sharply down as crude prices surge on supply side fear
NEW DELHI – The rupee fell sharply against the dollar today as crude oil prices rose over 4.5% in early trade due to concern about supply after Saudi Arabia and other members of the Organization of Petroleum Exporting Countries announced on Sunday they would cut oil output by 1.16 mln barrels per day.
The surprise announcement of output reduction could aid inflation globally, dealers said. Investors are now closely monitoring the outcome of today’s virtual meeting of the OPEC ministerial panel, which includes Saudi Arabia and Russia. Investors expect the panel to stick to its 2-mln-bbl-a-day cut till the end of 2023.
At 0927 IST, the June contract of Brent crude oil on the Intercontinental Exchange was at $84.28 a barrel as against $79.89 a bbl on Friday. It was at $79.27 a bbl on Thursday.
A fall in domestic share indices also weighed on the Indian unit, dealers said. At 0928 IST, Nifty 50 and Sensex were up 0.1% and 0.2%, respectively.
The Indian unit also found support from the narrowed current account deficit. India’s current account deficit narrowed to $18.2 bln in Oct-Dec from the previous quarter
“If it (rupee) breaks 82.50 (a dollar), it can go up till 82.60 (a dollar level). Overall, I think, rupee should be within the range for the day,” a dealer at a state-owned bank said.
Dealers have pegged the next technical resistance for the rupee at 82.10 a dollar. The rupee is expected to move in the range of 82.10-82.60 a dollar for the rest of the day, dealers said. (Ananya Chaudhuri)
India Rupee: Expected range for rupee – Apr 3
NEW DELHI – Following are the expected support and resistance levels for the rupee today, as forecasted by leading banks and brokerages in an Informist poll:
(Ananya Chaudhuri)
End
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Akul Nishant Akhoury
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