Informist, Friday, May 26, 2023
By Aiswarya Santhosh
MUMBAI – The rupee ended at an over one-week high against the dollar today as banks sold dollars for foreign fund inflows and exporters, dealers said. A surge in domestic equity indices also supported the Indian currency, dealers said.
The Indian unit settled 0.2% higher at 82.5750 against the greenback, compared with 82.7400 a dollar on Thursday. The rupee traded in a range of 18 paise through the day.
The rupee opened largely steady against the dollar today as a sharp drop in crude oil prices was offset by a firm dollar index, dealers said. Crude oil prices plunged on Thursday after Russian Deputy Prime Minister Alexander Novak said additional production cuts by the Organization of the Petroleum Exporting Countries and its allies were unlikely, dealers said.
“I don’t think that there will be any new steps, because just a month ago certain decisions were made regarding the voluntary reduction of oil production by some countries…,” Novak said, according to a media report.
On Tuesday, comments by Saudi Arabia’s energy minister had led to concern about more supply cuts by OPEC and its allies.
At 1506 IST, the July contract of Brent crude oil on the Intercontinental Exchange was at $76.40 a barrel, against $76.26 a bbl on Wednesday. It was $76.84 a bbl on Tuesday.
However, the dollar index remained firm after rising to an over two-month high on Thursday after data showed a robust US economy. Gains in the dollar were also due to safe-haven demand as investors were concerned over the US debt ceiling issue, dealers said.
Data on Thursday as reported by commerce department showed that US GDP expanded 1.3% in Jan-Mar, compared to 1.1% earlier reported. Data also showed the number of Americans filing for jobless benefits in the past two weeks was revised lower by 50,000 as fraud claims were sorted out. In the past week, however, jobless benefit claims increased by 4,000 to 229,000.
Robust economic data from the US raised the odds that the Federal Reserve may hike the interest rate at its next policy meeting in June.
According to the CME FedWatch tool, the Fed fund futures market is pricing in a 41.2% chance of a 25-basis-point rate hike at the US Fed’s next policy meeting while the rest expect status quo.
Today, the dollar index remained firm through the day, limiting gains for the Indian currency. At 1530 IST, the index, which measures the strength of the greenback against a basket of six major currencies, was at 104.1, as against 104.21 on Thursday. It was at 103.88 on Wednesday.
Soon after opening, the rupee started to rise as banks sold dollars for exporters at the 82.70 a dollar level, noting the relatively higher dollar/rupee levels, dealers said.
Gradually, the Indian unit rose throughout the day as banks persistently sold the greenback for foreign fund inflows, dealers said. During the last leg of trade, the rupee touched the day’s high of 82.5575 a dollar due to continuous foreign fund inflows, they said.
“It (USDINR) traded in a tight range mostly, but at the end it rose to 82.55 levels due to heavy (dollar) inflows,” said a dealer with a state-owned bank.
A surge in domestic equity indices also aided the Indian unit. Both the Nifty 50 and the Sensex closed 1% higher.
Dealers also noted that banks bought dollars for some importers at the 82.60 dollar level, limiting gains for the Indian currency. However, the nature of the buying was insignificant.
FORWARDS
The premium on the one-year dollar/rupee forward contract fell to an over five-month low, tracking a jump in US Treasury yields on Thursday, dealers said.
The yield on the benchmark 10-year US Treasury notes rose on Thursday as a slew of upbeat economic data in the US recently indicated that the world’s largest economy remains resilient in the face of high interest rates, which fuelled fears of another rate hike by the US Federal Reserve in its upcoming review meeting on Jun 13-14.
Premiums on forwards of a currency pair are reflective of the interest rate differential between the two countries.
However, some banks and importers bought dollars for forward delivery, noting gains in the rupee and due to relatively low levels, which limited losses for the premiums, dealers said.
The premium on the one-year dollar/rupee contract was 162.30 paise, against 168.27 paise on Thursday. On an annualised basis, the premium was at 1.96%, against the previous close of 2.02%.
OUTLOOK
On Monday, the rupee will take cues from overnight movement in the dollar index and crude oil prices, dealers said.
“The expected range for dollar/rupee next week could be 82.00-83.00. It would be a good opportunity for importers to hedge dollars if one gets 82 as below 82 RBI is a dollar buyer. The risk is what happens if a (US debt ceiling) deal does not happen. In that case the market continues to speculate,” said Anil Kumar Bhansali, head of treasury, Finrex Treasury Advisors LLP.
Dealers pegged immediate key technical resistance for the rupee at 82.50 a dollar. During the day, the rupee is seen in a range of 82.50-83.00 a dollar.
India Rupee – World FX: Sterling up on upbeat UK retail sales data
India Rupee – World FX: Sterling up on upbeat UK retail sales data
NEW DELHI – The pound sterling rose 0.3% against the dollar today after data showed retail sales in the UK grew more than expected in April, which sparked expectations that Bank of England may continue with its hawkish stance.
Retail sales in the UK rose 0.5% on month in April, against the estimate of a 0.3% rise and a decline of 1.2% in March.
The Australian dollar rose 0.3% against the US unit, tracking gains in the Chinese yuan. The onshore Chinese yuan gained due to support from the People’s Bank of China. China accounts for a third of Australia’s international trade.
The dollar index remained firm near a two-month-high after roust US jobless claims data, and upward revision of US GDP for Jan-Mar period led to fears of another rate hike by the US Federal Reserve at its next policy review meeting on Jun 13-14.
Further, the dollar gained on safe-haven demand as market participants wait for the US to reach an agreement in the ongoing US debt ceiling negotiations.
According to CME FedWatch tool, the Fed fund futures market is pricing in a 41.2% chance of a 25-basis-point rate hike in the US Fed’s next policy meeting while the rest are expecting status quo.
At 1530 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 104.1, as against 104.21 on Thursday. It was at 103.88 on Wednesday. (Ananya Chaudhuri)
India Rupee: Rises as banks sell dollars for FX inflows, exporters
MUMBAI – The rupee rose against the dollar today as banks sold the greenback for exporters, noting relatively higher dollar/rupee levels, dealers said. Banks also sold dollars for foreign fund inflows, they added.
“Rupee is range-bound today, there was selling (dollars) as traders who were long, hedged their positions and sold off,” said a dealer with a state-owned bank.
Gains in domestic equity indices also supported the Indian unit, dealers said. At 1316 IST, the Nifty 50 and the Sensex were up 0.6% each.
However, gains in the Indian unit were capped as the dollar index remained firm following recent robust economic data and due to safe-haven demand as investors are concerned over the US debt ceiling issue as the Jun 1 deadline draws near, dealers said.
Data showed the number of Americans filing for jobless benefits in the past two weeks was revised down by 50,000 as fraud claims were sorted out. In the past week, however, jobless benefit claims increased by 4,000 to 229,000.
Dealers pegged immediate technical resistance for the rupee at 82.60 a dollar. During the day, the unit is seen at 82.60-82.90 a dollar. (Aiswarya Santhosh)
India Rupee – Asia FX: Most units up on hope of US debt ceiling deal
NEW DELHI – Most Asian currencies rose against the dollar today as the dollar index eased due to hope that negotiations on the US government’s debt ceiling would result in an agreement soon.
US President Joe Biden and top Congressional leader Kevin McCarthy seemed to be nearing an agreement on raising the US government’s borrowing limit of $31.4 trln before Jun 1, when the world’s largest economy has to make payments on its debt. McCarthy reportedly said he would work over the weekend to hammer out a deal on the debt ceiling issue.
At 1030 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 104.1, as against 104.21 on Thursday. It was at 103.89 on Wednesday.
The Philippine peso rose 0.4% against the greenback, while the country awaits a new central bank governor for further direction on its policy stance.
The Chinese yuan and Taiwanese dollar both rose 0.3% against the greenback.
Bucking the trend, the Malaysian ringgit was down 0.1% against the US unit after data showed Malaysia’s consumer price based inflation rose 3.3% on year in April, in line with a Reuters poll forecast. The CPI inflation print for March was 3.4%. (Ananya Chaudhuri)
India Rupee: Slightly up as crude oil down on better supply outlook
MUMBAI – The rupee was slightly higher against the dollar today due to a fall in the prices of crude oil after Russian Deputy Prime Minister Alexander Novak said the Organization of the Petroleum Exporting Countries and its allies were unlikely to impose additional production cuts, dealers said.
“I don’t think that there will be any new steps, because just a month ago certain decisions were made regarding the voluntary reduction of oil production by some countries…” Novak said, according to a media report. Earlier, comments by Saudi Arabia’s energy minister had led to concern of more supply cuts by OPEC and its allies.
At 0928 IST, the July contract of Brent crude oil on the Intercontinental Exchange was at $76.06 a barrel as against $76.26 a bbl on Thursday. It was $78.36 a bbl on Wednesday.
“Rupee will remain in a narrow range today, RBI will support it,” said a dealer with a state-owned bank.
However, a rise in the dollar index to an over two-month high on Thursday limited gains for the Indian unit. Dollar index rose following robust US economic data and on safe-haven demand as investors remain wary of the US debt ceiling issue, dealers said.
Data showed the number of Americans filing for jobless benefits in the past two weeks was revised down by 50,000 as fraud claims were sorted out. In the past week, however, jobless benefit claims increased by 4,000 to 229,000.
Dealers said the Reserve Bank of India may sell the greenback to prevent the rupee from falling beyond the psychologically-crucial level of 83.00 a dollar. They pegged immediate technical resistance for the rupee at 82.60 a dollar. During the day, the unit is seen at 82.60-82.90 a dollar. (Aiswarya Santhosh)
India Rupee: Expected range for rupee – May 26
MUMBAI – 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 Avishek Dutta
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