Informist, Thursday, Jun 1, 2023
By Kabir Sharma
MUMBAI – The rupee ended sharply higher against the dollar today due to higher-than-expected domestic GDP growth and a recovery in offshore Chinese yuan, dealers said.
“There were three major factors in the market today – a good GDP number has boosted sentiment, and now people are eyeing a pause from the Fed, also the debt ceiling thing, so overall a very positive day for INR,” a dealer with a big state-owned bank said.
After touching a high of 82.3400 during the day, the rupee ended at 82.4050 a dollar against Wednesday’s close of 82.7225 a dollar.
The rupee opened sharply higher against the dollar as India’s GDP growth rose sharply to 6.1% in Jan-Mar from 4.5% in Oct-Dec. The GDP growth in Jan-Mar was way higher than the consensus estimate. According to an Informist poll, it was seen at 5.1%.
A high GDP number, mainly on account of growth in industry activity, shows that the Indian economy has remained resilient. Data released from the National Statistical Office on Wednesday showed the Indian economy grew 7.2% in 2022-23, 20 basis points higher than the advance estimate of NSO.
A broad-based weakness in dollar during early trade also supported the rupee, dealers said.
The dollar weakened globally after comments from Federal Reserve Governor and Vice-Chair nominee Philip Jefferson. “Skipping a rate hike at a coming meeting would allow the (Federal Open Market) Committee to see more data before making decisions about the extent of additional policy firming,” Jefferson said.
A recovery in offshore Chinese yuan also supported the rupee, dealers said. The yuan rose as risk sentiment amongst investors got a boost after a bill to increase the US government’s borrowing limit and cap government’s spending was passed in the House of Representatives on Wednesday by a wide margin. The bill now awaits nods from the Senate.
However, some banks sold dollars on behalf of oil marketing companies, which also weighed on the rupee, dealers said. Oil companies were looking to take advantage of relatively lower crude oil prices, they said.
Oil prices fell for the third consecutive session in early trade today after data showed an unexpected build in US crude stocks last week. The surprise rise in crude stockpiles triggered fears of excess supply amid growing concerns over weak Chinese demand.
American Petroleum Institute data on Wednesday showed that the US’ crude oil stockpiles increased by around 5.2 mln barrels last week. Comparatively, a Reuters poll predicted a drawdown of 1.4 mln bbl.
FORWARDS
The premium on the one-year dollar/rupee forward contract erased all earlier gains and settled lower because banks and exporters sold dollars for forward delivery, noting a rise in levels in early trade, dealers said.
“Exporters are taking benefit of the rise in levels, other than that premiums are tracking US yields actively. Once the 1.70% level breaches sustainably we’ll see a further fall in premiums,” a dealer with a state-owned bank said.
Earlier in the day, premiums on the one-year dollar/rupee forward contract jumped to a high of 1.79% tracking a fall in US Treasury yields on Wednesday, dealers said.
The yield on the benchmark 10-year US Treasury was lower before the vote on the US debt ceiling deal in the House of Representatives, and crucial jobs data.
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 143.92 paise, against 145.21 paise on Wednesday. On an annualised basis, the premium was at 1.74%, against the previous close of 1.75%.
OUTLOOK
On Friday, the rupee will take cues from overnight movement in the dollar index and crude oil prices, dealers said.
“Rupee is expected to be in a range of 82.25/75 on Friday as oil (price) falls while Asian currencies depreciate. Inflows and lower oil buying has been the reason for this appreciation of the rupee,” said Anil Kumar Bhansali, head of treasury, Finrex Treasury Advisors LLP.
Market participants now await US non-farm payroll data, due later today.
Dealers pegged the immediate key technical resistance for the rupee at 82.30 a dollar. During the day, the rupee is seen in a range of 82.30-82.80 a dollar.
India Rupee – World FX: Dlr falls on US Fed officials’ dovish remarks
NEW DELHI – The dollar index fell from a two-month high after the US Federal Reserve officials’ dovish comments led to market expectations that the US central bank may pause its aggressive rate hike cycle.
The US Fed Governor and Vice-Chair nominee Philip Jefferson said, “Skipping a rate hike at a coming meeting would allow the (Federal Open Market) Committee to see more data before making decisions about the extent of additional policy firming.”
According to CME FedWatch tool, 67.9% traders are expecting a pause, while the rest expect another quarter of percentage of rate hike by the US Fed.
At 1614 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 104.12 as against 104.23 on Wednesday. It was at 104.06 on Tuesday.
The Euro rose 0.2% against the dollar. Data showed today Europe’s inflation declined to 6.1% in May from 7.0% in April, against a Reuters’ poll projection of 6.3%.
The pound sterling rose 0.1% against the US unit. (Ananya Chaudhuri)
India Rupee: Remains up on robust India GDP growth, recovery in yuan
MUMBAI – The rupee remained sharply up against the dollar as India’s GDP data for Jan-Mar came in much stronger than expected, showing resilience in the Indian economy, dealers said.
“India’s GDP (growth) has been very positive. There are factors from the US also, but our macroeconomic data is really supporting the rupee,” a dealer with a big state-owned bank said.
Data released by the National Statistical Office on Wednesday showed India’s GDP grew 6.1% in Jan-Mar compared with the consensus estimate of 5.1% for the quarter. In the year ended March, the Indian economy grew 7.2%, 20 basis points higher than the advance estimate of NSO.
A sharp recovery in offshore Chinese yuan also supported the rupee, dealers said.
The yuan recovered against the dollar as risk sentiment for emerging assets improved after the bill to raise the US government’s debt limit was passed in the House of Representatives by a wide margin. The bill will now be sent to the Senate, just days before Monday’s US default deadline, CNBC reported.
However, some banks bought the greenback on behalf of oil marketing companies which weighed on the rupee, dealers said.
Dealers have pegged the next technical resistance for the rupee at 82.30 a dollar. During the day, it is seen at 82.20-82.60 a dollar. (Kabir Sharma)
India Rupee: Soars on robust India GDP, weak dlr post Fed comments
MUMBAI – The rupee surged against the dollar as India’s GDP data came in sharply higher than expected on Wednesday, showing resilience in the Indian economy, dealers said.
Moreover, the dollar weakened globally after comments by Federal Reserve officials suggested the central bank may skip a rate hike at its meeting this month. The risk sentiment for emerging assets also improved as the bill to raise the US government’s debt limit and cap government spending was passed in the House of Representatives by a wide margin. The bill will now be sent to the Senate, just days before Monday’s US default deadline, CNBC reported.
“The (India) GDP figures have boosted INR. Fed comments and acceptance of debt ceiling are also pulling the pair (USD-INR) down,” a dealer with a foreign bank said.
India’s GDP growth came in at 6.1% in Jan-Mar compared with 4.5% in Oct-Dec mainly on account of growth in industry activity, data released by the National Statistical Office showed. The Indian economy had grown 4.0% in the March quarter of the previous year.
The GDP growth in Jan-Mar was way higher than the consensus estimate. According to an Informist poll, it was seen at 5.1%.
For 2022-23 (Apr-Mar), the Indian economy grew 7.2%, which was 20-basis-point higher than earlier estimated by the NSO. On an annual level, the GDP growth was driven by a boost in services activity. The services sector grew 9.5% in 2022-23 compared with 8.8% in 2021-22.
Meanwhile, the dollar weakened globally after comments from Federal Reserve Governor and Vice-Chair nominee Philip Jefferson, dealers said. “Skipping a rate hike at a coming meeting would allow the (Federal Open Market) Committee to see more data before making decisions about the extent of additional policy firming,” Jefferson said.
At 0941 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 104.26 as against 104.23 on Wednesday. It was at 104.06 on Tuesday.
Dealers have pegged the next technical resistance for the rupee at 82.30 a dollar. During the day, it is seen at 82.20-82.60 a dollar. (Kabir Sharma)
India Rupee – Asia FX: Most up on Fed comments, US debt ceiling deal
MUMBAI – Most Asian currencies were up against the dollar as the greenback weakened after US Federal Reserve officials said the central bank might “skip” a rate hike at its Jun 13-14 meeting.
The dollar index fell from an over two-month high after comments by Federal Reserve Governor and Vice-Chair nominee Philip Jefferson. “Skipping a rate hike at a coming meeting would allow the (Federal Open Market) Committee to see more data before making decisions about the extent of additional policy firming,” Jefferson said.
Further, Federal Reserve Bank of Philadelphia President Patrick Harker said he would also be inclined to skip a hike at the June meeting. “I am in the camp increasingly coming into this meeting thinking that we really should skip,” Harker said.
Before the comments, the CME FedWatch tool showed 71% of Fed fund futures traders were pricing in a 25-basis-point rate hike at the June meeting. However, after the comments, only 37.8% traders were still expecting a pause, the FedWatch tool showed.
The risk sentiment for emerging assets also improved as the bill to raise the US government’s debt limit and cap government spending was passed in the House of Representatives by a wide margin. The bill will now be sent to the Senate, just days before Monday’s US default deadline, CNBC reported.
The South Korean won led the gains and was up 0.5% against the dollar. The Taiwan dollar and the Malaysian ringgit were up 0.2% and 0.1%, respectively. (Kabir Sharma)
India Rupee: Expected range for rupee – Jun 1
MUMBAI – Following are the expected support and resistance levels for the rupee today, as forecasted by leading banks and brokerages in an Informist poll:
(Kabir Sharma)
End
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Tanima Banerjee
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