Informist, Friday, Jun 30, 2023
By Ananya Chaudhuri
NEW DELHI – The rupee ended largely steady against the dollar today, as sales of the greenback on account of foreign portfolio inflows offset the impact of state-owned banks’ persistent dollar buys for oil marketing companies and other importers, dealers said.
Today, the Indian currency settled at 82.0400 against the US unit, after trading in a tight range of 5 paise throughout the day. The rupee ended at 82.0550 a dollar on Wednesday. Indian financial markets were closed on Thursday on account of Id-ul-Zuha.
“Inflows (of dollars) were definitely there, but market was supported from the downside from importer bookings. Usually, there are importers’ buying (of dollars) at the month-end,” a dealer at state-owned bank said. “So, it (rupee) was well-supported, and not even going down below 82.05 (a dollar) level.”
The Indian currency started the day largely steady against the greenback today, as the dollar index was steady in Asian trade with traders awaiting US personal consumption expenditure index for May, due to be released later today, dealers said.
US personal consumption expenditure data is an important inflation metric for the US Federal Reserve. In a poll by Reuters, economists have forecast the core personal consumption expenditure index to come steady at 4.7% on year.
The dollar index rose to over two-week high on Thursday after data showed the US economy remained resilient amid high interest rates, which fuelled fears of further rate hikes by the US central bank. According to the CME FedWath tool, fed funds futures traders are pricing in an 86.8% possibility of a 25-basis-point rate hike at the US Fed’s July policy meeting, while 13.2% expect status quo.
At 1640 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 103.38 as against 103.36 on Thursday. It was at 102.97 on Wednesday.
The local unit moved to the day’s low of 82.0500 against the greenback as state-owned banks rushed to purchase dollars on behalf of oil marketing companies that expected crude oil prices to rise further hereon, dealers said.
Oil futures continued to rise on Thursday as investors were worried about supply of the commodity ahead of Saturday, when an output cut by Saudi Arabia will take effect. Saudi Arabia, one of the key members of the Organization of the Petroleum Exporting Countries, announced in early June that it would reduce crude oil output by 1 mln barrels a day from Jul 1.
At 1640 IST, the July contract of Brent crude oil on the Intercontinental Exchange was at $74.36 a barrel as against $74.34 a bbl on Thursday. It was at $74.03 a bbl on Wednesday.
Banks persistently sold dollars on account of foreign portfolio inflows into Indian equities, which supported the rupee, dealers said.
“Weakness is not reflecting (on rupee) just because inflows are strong, equities are at all-time high. Also, current account deficit data is again a factor which is showing exports are picking up,” a dealer at a state-owned bank said.
Today, the benchmark Nifty 50 and the Sensex settled at all-time closing highs, led by sharp gains in information technology and automobile stocks. The Nifty 50 and the Sensex indices ended 1.1% and 1.3% higher, respectively.
India’s current account deficit slumped to a seven-quarter low of $1.3 bln in Jan-Mar, owing to a sharp decline in trade deficit and a rise in services exports.
FORWARDS
Premiums on one-year dollar/rupee forward contracts ended at the lowest level since Dec 6, tracking a rise in US Treasury yields, dealers said.
The yield on the benchmark 10-year US treasury note rose after data showed on Thursday that initial jobless claims in the US declined more than expected in the week ended Jun 24. Further, the US Commerce Department scaled up the GDP estimate for Jan-Mar to 2.0% from 1.3% in May. The data fuelled market participants’ expectations of a rate hike by the US Fed at its July meeting.
US Fed Chairman Jerome Powell indicated at an event organised by the Spanish central bank in Madrid that the US central bank was likely to hike interest rates further.
According to the CME FedWath tool, fed funds futures traders are pricing in an 86.8% possibility of a 25-basis-point rate hike at the US Fed’s July policy review meeting, while 13.2% expect status quo.
“The differential is going to come down to 100-125 bps in July, so that is the primary reason why the premiums are falling now. They are also tracking a rise in US treasuries,” a dealer at a big state-owned bank said.
Premium 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 136.07 paise as against 145.21 paise on Wednesday. On an annualised basis, the premium was at 1.65%, against the previous close of 1.76%. Indian financial markets were closed on Thursday on account of Id-ul-Zuha.
OUTLOOK
On Monday, the rupee will take cues from movement in the dollar index and crude oil prices, dealers said.
Market participants await US personal consumption expenditure index on Friday for guidance on the US Fed’s next monetary policy decision, dealers said.
“After today’s personal consumption expenditure data, market will have some direction. Job market (in the US) is still strong, so I am expecting it’ll come on higher side,” a dealer at a big state-owned bank said.
Dealers peg immediate key technical support for the rupee at 82.20 a dollar. During the day, the rupee is seen at 81.80-82.30 a dollar.
India Rupee – World FX: Dollar index remains firm after US econ data
MUMBAI – The dollar index remained firm after data showed that labour market in the US remained resilient despite high interest rates, which fuelled fears of further rate hikes.
Data from the US Labor Department showed that the number of people filing initial claims for state unemployment benefits declined 26,000 to a seasonally-adjusted 239,000 for the week ended Jun 24, marking the largest decline in jobless claims in 20 months. A Reuters poll had estimated the figure at 265,000.
Further, the US Federal Reserve Chairman Jerome Powell hinted that the central bank is likely to continue to raise interest rates in order to bring inflation down to its target rate, which added to expectations of a rate hike at the Fed’s July policy meeting.
According to the CME FedWatch tool, Fed fund futures traders are factoring in an 86.8% probability of a 25-basis-point rate hike at the July policy meeting, while the rest expect a pause.
At 1544 IST, the dollar index, which measures strength of the greenback against a basket of six major currencies, was at 102.45 as against 102.75 on Monday. It was at 102.87 on Friday.
The pound sterling rose 0.2% against the dollar, while the Euro fell 0.2% against the greenback. (Aiswarya Santhosh)
India Rupee: In thin range; banks’ dlr sales for FPI inflows support
NEW DELHI – The rupee moved in a narrow range against the greenback today as some banks’ dollar sales on account of foreign portfolio inflows into Indian equities offset state-owned banks’ dollar buys for oil marketing companies, dealers said.
So far today, the Indian currency has moved in a thin range of 4 paise against the greenback.
Dealers said some banks sold the US unit at around 82.00-82.01 a dollar level on account of foreign portfolio inflows into equities that supported the local unit. At 1301 IST, the both Nifty 50 and Sensex were 0.9% up.
However, dealers also said state-owned banks bought dollars for oil marketing companies which exerted pressure on the rupee. “Oil bids are there as oil prices are moving upwards. Saudi’s output cut will also take effect from July,” a dealer at a state-owned bank said. “As of now, if there’s any dip (in dollar/rupee) they’re (importers) booking.”
Saudi Arabia, one of the key members of Organization of Petroleum Exporting Countries, announced in early June that it will reduce oil output by 1 mln barrels a day from Jul 1.
At 1303 IST, the July contract of Brent crude oil on the Intercontinental Exchange was at $74.50 a bbl as against $74.34 a bbl on Thursday. It was at $74.03 a bbl on Wednesday.
Market participants now await US Personal Consumption Expenditure index, due to be published later today, dealers said. A Reuters’ poll has forecast the core personal consumption expenditure index to be steady at 4.7%. The index is a preferred inflation gauge of the US Federal Reserve.
Dealers have pegged the next technical support for the rupee at 82.30 a dollar. During the day, it is seen in the range of 81.90-82.30 a dollar. (Ananya Chaudhuri)
India Rupee: Largely flat as dlr steadies today ahead of US PCE data
NEW DELHI – The rupee was largely flat against the greenback today as the dollar index steadied in early trade today as traders await the US personal consumption expenditure index for May, due to be released later today, dealers said.
US personal consumption expenditure data is an important inflation metric for the US Federal Reserve. Economists forecast the core personal consumption expenditure index to be steady at 4.7% in a Reuters’ Poll.
The dollar index rose to over two-week high on Thursday after data showed the US economy remained resilient defying high interest rates, which fuelled fears of further rate hike by the US central bank.
At 0947 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 103.28 as against 103.36 on Thursday. It was at 102.97 on Wednesday.
A rise in domestic share indices supported the local unit, dealers said. At 0947 IST, both the Nifty 50 and Sensex were 0.7% up.
However, a rise in crude oil prices weighed on the Indian currency, dealers said. Oil future prices continued to rise on Thursday as investors were worried about supply prospects of the commodity ahead of Saturday when Saudi Arabia’s output cut will take effect.
At 0948 IST, the July contract of Brent crude oil on the Intercontinental Exchange was at $74.55 a barrel as against $74.34 a bbl on Thursday. It was at $74.03 a bbl on Wednesday.
“We’re expecting equity inflows (of dollars). But, it (rupee) will be on a weaker footing today,” a dealer at a private bank said. “It’ month-end also, so importers will cover up around 81.95-81.96 (a dollar) level.”
Dealers have pegged the next technical support for the rupee at 82.30 a dollar. During the day, it is seen in the range of 81.90-82.30 a dollar. (Ananya Chaudhuri)
India Rupee – Asia FX: Most units fall as dlr up on rate hike fears
NEW DELHI – Most Asian currencies fell against the greenback today as the dollar index rose to an over two-week high on Thursday after data showed that the US economy remained resilient despite high interest rates, fuelling fears of further rate hikes, dealers said.
Data from the Labor Department showed the number of people filing initial claims for state unemployment benefits declined 26,000 to a seasonally adjusted 239,000 for the week ended Jun 24, marking the largest decline in jobless claims in 20 months. A Reuters poll had estimated the figure at 265,000.
Further, the US Commerce Department revised up its GDP estimate to 2.0% for Jan-Mar from 1.3% reported in May. The revised figure was above the previous estimate of 1.4%.
Fed fund future traders are now factoring in an 86.8% possibility of a 25-basis-point rate hike by the US central bank at its July policy review meeting, with a 13.2% possibility of status quo.
At 0907 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 103.32 as against 103.36 on Thursday. It was at 102.97 on Wednesday.
Asian currencies moved 0.1-0.3% lower against the greenback today.
Bucking the trend, the Chinese yuan was flat against the greenback. The country’s official manufacturing purchasing managers’ index came in at 49.0 in June compared with 48.8 in May, as per data from the National Bureau of Statistics of China. (Ananya Chaudhuri)
India Rupee: Expected range for rupee – Jun 30
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 Avishek Dutta
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