Informist, Monday, Jun 12, 2023
By Aiswarya Santhosh
MUMBAI – After moving in a narrow range throughout the day, the rupee ended largely steady against the dollar today as market participants were cautious ahead of the US Federal Reserve’s monetary policy outcome and US CPI data, both due this week, dealers said.
Today, the Indian currency settled at 82.4300 against the greenback after moving in a thin range of 7 paise. The Indian unit had settled at 82.4625 a dollar on Friday.
The rupee opened largely steady at 82.4400 against the dollar as a fall in crude oil prices was offset by a rise in the dollar index.
The dollar index settled higher on Friday ahead of the release of US CPI data for May, due Tuesday and the US Federal Open Market Committee’s meeting outcome on Wednesday, dealers said.
Crude oil prices plunged due to concerns over demand for the commodity in China, the world’s largest crude oil importer, dealers said. Demand concerns from China arose after the recent slew of weak economic data from the country.
At 1512 IST, the July contract of Brent crude oil on the Intercontinental Exchange was at $73.00 a barrel, as against $74.79 a bbl on Friday. It was at $75.96 a bbl on Thursday.
Throughout the day, the rupee moved in a narrow range as traders refrained from placing fresh bets as they await the FOMC meeting outcome, dealers said.
Traders largely expect the Fed to pause with regard to interest rates on Wednesday. According to CME Fedwatch tool, 79.3% traders believe the Fed will keep its rate unchanged in the 5-5.25% range, while the rest expect a 25-basis-point hike.
Further, traders also await the US CPI data for cues on the Fed’s policy decision. Headline inflation is expected to decline to 4.1% on year in May, from 4.9% in April, according to a Reuters’ poll.
“Rupee was range bound today, mostly market expects a pause by the Fed and US inflation is also likely to be on the lower side,” said a dealer with a big state-owned bank. “In case inflation comes higher, then there is a chance of a 25 bps hike by the Fed.”
During the day, the dollar index declined globally ahead of US CPI data release, which supported the Indian unit. At 1527 IST, the dollar index, which measures strength in the greenback against a basket of six major currencies, was at 103.31 as against 103.55 on Friday. It was at 103.31 on Thursday.
A rise in the domestic share indices also supported the Indian unit. The Nifty 50 and Sensex each ended 0.2% higher.
However, dealers said that some banks bought the greenback for oil marketing companies at the day’s high of 82.40 a dollar noting lower crude oil prices, which weighed on the Indian unit.
FORWARDS
Premiums on one-year dollar/rupee forward contracts fell tracking a rise in the US Treasury yields on Friday, dealers said.
The yield on the benchmark 10-year US Treasury note rose on Friday as investors braced for an event-heavy week. The US CPI print for May and the Fed’s policy decision are both scheduled for this week.
Investors also await the release of India CPI data, due later today. According to an Informist poll, the retail inflation rate is estimated to fall to a 20-month low of 4.4% in May, down from 4.7% in April.
Premiums on forwards of a currency pair are reflective of the interest rate differential between the two countries.
The premium on the one-year contract was at 144.27 paise as against 146.50 paise on Friday. On an annualised basis, the premium was at 1.75% as against 1.77% at the previous close.
OUTLOOK
On Tuesday, the rupee will take cues from movement in the dollar index and crude oil prices, dealers said.
“Tomorrow also rupee is expected in the same range of 82.35 to 82.65 as FOMC meeting starts with the verdict on Jun 14 night,” said Anil Kumar Bhansali head of treasury, executive director, Finrex Treasury Advisors LLP.
Dealers said market participants also await the India CPI data which is due to be released after market hours today.
Dealers have pegged the immediate key technical resistance for the rupee at 82.4000 a dollar. During the day, the rupee is seen at 82.20-82.60 a dollar.
India Rupee – World FX: Dlr index falls ahead of US CPI, FOMC meet
NEW DELHI – The dollar fell against major peers across the globe ahead of the release of US inflation figure and the US Federal Reserve’s policy decision this week.
The US Labor Department will publish CPI print for May on Tuesday which is going to be a crucial data ahead of the US Fed policy meeting as the central bank is likely to assess the inflation figure before coming to a decision. The headline inflation is expected to decline to 4.1% on year in May, from 4.9% in April, according to a Reuters’ poll.
Market participants largely expect the US central bank to hold its key rate unchanged at the current level of 5.00-5.25% in its policy meeting on Tue-Wed. According to the CME Fedwatch tool, 72% traders believe the Federal Reserve will keep its rate unchanged, while the rest expect a 25-basis-point hike.
At 1509 IST, the dollar index, which measures strength in the greenback against a basket of six major currencies, was at 103.32 as against 103.55 on Friday. It was at 103.31 on Thursday.
The euro rose 0.3% against the US currency on expectation that the European Central Bank may hike rate by another 25 basis points in its upcoming policy meeting Thursday. In a Reuters’ poll, economist projected a 25-bps rate hike in the June meeting as the inflation remained well above the central banks’ target rate of 2.00%.
The pound sterling was up 0.2% against the US unit.
India Rupee: Largely steady ahead of FOMC meet, US CPI release
MUMBAI – The rupee was largely steady against the dollar today as market participants remained cautious ahead of US Federal Reserve’s monetary policy outcome and US CPI data, both due this week, dealers said.
Traders await the Federal Reserve’s policy decision, due Wednesday. A majority of them expect the central bank to pause its rate hiking cycle after recent economic data. According to the data, the number of people filing for state unemployment benefits in the US surged by 28,000 to a seasonally adjusted 261,000 for the week ended Jun 3, higher than a Reuters’ poll forecast of 235,000 claims.
Market participants also await the US inflation data for May, which is due to be released on Tuesday.
According to the CME Fedwatch tool, 78.1% traders believe the Federal Reserve will keep its rate unchanged in the 5.00-5.25% range, while the rest expect a 25-basis-point hike.
Today, the rupee moved in a narrow range of only 7 paise so far.
“Rupee is range bound only, volumes are very low as traders are not taking positions ahead of US FOMC,” said a dealer with a state-owned bank. “Rupee will likely be in this narrow range until after the FOMC.”
A rise in domestic share indices supported the Indian unit, dealers said. At 1328 IST, both the Nifty 50 and the Sensex rose 0.2%.
Dealers have pegged next technical resistance for the rupee at 82.40 a dollar. During the day, it is seen at 82.20-82.60 a dollar. (Aiswarya Santhosh)
India Rupee – Asia FX:Most down as dlr index gains ahead of FOMC meet
NEW DELHI – Most Asian currencies fell against the greenback today as the dollar index rose slightly ahead of the US Federal Reserve’s policy decision, due on Jun 14.
The central bank is expected to hold its key benchmark interest rate at the current level. According to the CME FedWatch tool, Fed fund futures traders are pricing in a 75.9% possibility of a pause at this week’s meeting, with a 24.1% chance of a 25-basis-point rate hike.
Further, traders also remained cautious ahead of the crucial US inflation data, which will come out on Tuesday. The data is largely expected to show moderation in the headline inflation figure.
At 1059 IST, the dollar index, which measures strength in the greenback against a basket of six major currencies, was at 103.60 as against 103.55 on Friday. It was at 103.31 on Thursday.
Asian currencies moved 0.1-0.2% lower against the US unit today.
Bucking the trend, the South Korean won rose 0.2% after Bank of Korea’s governor said today that a more sophisticated approach to central bank’s the monetary policy is required this year due to risk to growth and financial stability. (Ananya Chaudhuri)
India Rupee: Up a tad as crude prices down post weak China econ data
MUMBAI – The rupee rose slightly against the dollar today as crude oil prices fell due to concerns around demand for the commodity in China, dealers said. Weak economic data from China last week raised fears related to demand from the world’s largest crude oil importer, they said.
At 0937 IST, the July contract of Brent crude oil on the Intercontinental Exchange was at $73.97 a bbl, as against $74.79 a bbl on Friday. It was at $75.96 a bbl on Thursday.
A rise in domestic share indices also supported the Indian unit, dealers said. At 0929 IST, both the Nifty 50 and the Sensex were up 0.15%.
“Rupee will be range-bound today, if it (USDINR) breaks 82.40 level, then rupee may rise to 82.35 levels,” said a dealer with a private bank. “Exporters may sell (dollars) at the 82.60 levels.”
Market participants keenly await the outcome of the US Federal Reserve’s monetary policy review on Jun 13-14, where the Fed is largely expected to pause its interest rate hikes. According to the CME Fedwatch tool, 72% traders believe the Federal Reserve will keep its rates unchanged, while the rest expect a 25-basis-point hike.
Dealers have pegged next technical resistance for the rupee at 82.20 a dollar. During the day, it is seen at 82.20-82.60 a dollar. (Aiswarya Santhosh)
India Rupee: Expected range for rupee – Jun 12
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 Santosh)
End
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Aditya Sakorkar
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