Informist, Tuesday, Jul 18, 2023
By Kabir Sharma
MUMBAI – The rupee ended steady against the dollar today as dollar sales by banks for foreign fund inflows were offset by their dollar buys likely on behalf of the Reserve Bank of India, dealers said.
“There was some selling for inflows, but it was not as significant as we were expecting. PSUs (public sector banks) made sure that the pair (USD/INR) did not go down much as they kept buying near 82 levels,” a dealer with a big state-owned bank said.
The rupee moved in a narrow range of 11 paise today before settling at 82.0300 against Monday’s close of 82.0400 a dollar.
The rupee opened higher at 81.9900 a dollar as the dollar index fell ahead of the release of the US retail sales data, due later today, dealers said. Traders await the retail sales data for more cues on the US economy and to gauge the Federal Reserve’s monetary policy path going ahead.
The dollar index fell to 99.70, under pressure of expectations that the Federal Reserve will take a break after next week’s rate hike. In contrast, the European Central Bank and Bank of England are expected to continue raising interest rates, supporting the euro and sterling.
At 1617 IST, the dollar index, which measures strength in the greenback against a basket of six major currencies, was at 99.70 as against 99.88 on Monday. It was at 99.96 on Friday.
Market participants await the release of inflation data from the UK and Eurozone, scheduled to be released on Wednesday.
The Indian unit erased all opening gains against the dollar as banks stepped in to purchase the greenback on behalf of importers to take advantage of the relatively lower dollar/rupee levels.
It remained in a narrow range throughout the day.
“The rupee remained in a small range of 81.96 to 82.07 for the entire day as inflows were matched by buying of dollars by RBI which did not allow rupee to rise,” said Anil Kumar Bhansali, head of treasury and executive director, Finrex Treasury Advisors LLP.
A rise in domestic share indices also provided support to the Indian unit, dealers said. The Nifty 50 and Sensex ended 0.3% and 0.2% up, respectively.
FORWARDS
Premiums on dollar/rupee one-year forward contracts rose tracking a fall in US Treasury yields, dealers said.
US Treasury yields fell ahead of the release of the retail sales data, due later today. Premiums on forwards of a currency pair are reflective of the interest rate differential between the two countries.
The rise in premiums on dollar/rupee one-year forward contracts was also because banks and importers bought dollars for forward delivery noting strong technical resistance for the rupee at 82.00 a dollar, dealers said.
“There’s a lot of paying in the market as it looks like RBI is intervening on every level above 82.00 (a dollar),” said a dealer with a brokerage firm.
The premium on the one-year dollar/rupee contract was 143.43 paise, against 140.88 paise on Monday. On an annualised basis, the premium was at 1.73%, against the previous close of 1.71%.
OUTLOOK
On Wednesday, the rupee will take cues from movement in the dollar index after the release of US retail sales data later today. It might also take cues from crude oil prices, dealers said.
“The rupee is expected to remain in the range of 81.90 to 82.20 as RBI continues to absorb inflows,” Bhansali said.
Dealers peg immediate key technical support for the rupee at 82.30 a dollar. During the day, the rupee is seen in the range of 81.80-82.30 a dollar.
India Rupee – World FX: Dlr index falls ahead of US retail sales data
India Rupee – World FX: Dlr index falls ahead of US retail sales data
NEW DELHI – The dollar index fell in early European trade as market participants awaited the release of the US retail sales data, due later today, for more insight into the world’s largest economy to gauge the US Federal Reserve’s next monetary policy decision.
At 1438 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 99.85 against 99.88 on Monday. It was at 99.96 on Friday.
The Japanese yen rose 0.3% against the greenback as investors raised bets that the Bank of Japan may widen the yield curve control policy’s trading band in its policy meeting next week.
The Australian dollar fell 0.1% against the US dollar after the release of the minutes of the Reserve Bank of Australia’s Jul 4 policy meeting. The minutes showed members decided to hold cash rate for restrictive stance to control inflation, while buying time to assess the cumulative impact of rate hikes on Australian economy so far. (Ananya Chaudhuri)
India Rupee:In thin band as dlr buys likely for RBI absorb FX inflows
NEW DELHI – The rupee moved in a narrow range of 11 paise against the dollar as state-owned banks bought dollars likely for the Reserve Bank of India, which absorbed banks’ greenback sales for foreign fund inflows, dealers said.
“The market should have gone towards upside, but I think public sector banks’ (dollar) buying is there,” a dealer at a big state-owned said. “If the (dollar) inflows are big, it (rupee) should go up cause dollar is softening now.”
State-owned bank rushed to purchase the US currency likely on behalf of the RBI to fill its foreign exchange reserves and to contain sharp appreciation of the rupee, dealers said.
Dealers said banks sold dollars on account of foreign fund inflows into an Indian corporate, which supported local unit.
A fall in the dollar index ahead of US retail sales data later today also aided the Indian unit’s upward movement. At 1303 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 99.62 against 99.88 on Monday. It was at 99.96 on Friday.
Dealers peg the immediate key technical support for the rupee at 82.20 a dollar. During the rest of the day, the rupee is seen in a range of 81.90-82.20 a dollar. (Ananya Chaudhuri)
India Rupee – Asia FX: Thai baht up 0.9% as PM vote in focus
NEW DELHI – The Thai baht rose 0.9% against the dollar on hopes of a quick resolution to the political stalemate over the country’s next prime minister. Move Forward Party’s Pita Limjaroenrat said on Monday that an eight-party alliance has assured its support to him to become the country’s next prime minister.
Limjaroenrat emerged as the winner of a May 14 election, but failed to gain the support of the combined lower house and military-appointed upper house in the first round of voting last week. The next vote is scheduled on Wednesday.
Other Asian currencies also rose as the dollar index declined ahead of the release of the US retail sales data, due later today. The data will provide investors further insights into the US economy and help them gauge the Federal Reserve’s monetary policy path moving ahead.
The South Korean won and Taiwanese dollar rose 0.5% and 0.2%, respectively, against the US unit.
Bucking the trend, the offshore Chinese yuan and Philippine peso remained largely flat against the greenback. (Ananya Chaudhuri)
India Rupee: Pares early gains as banks buy dollars for importers
NEW DELHI – The rupee pared all its opening gains against the dollar as banks stepped in to purchase the greenback on behalf of importers to take advantage of the relatively lower dollar/rupee levels, dealers said.
The rupee opened higher at 81.9900 a dollar as the dollar index fell ahead of the release of the US retail sales data, due later today, dealers said. Traders await the US retail sales data for more cues on the US economy and to gauge the Federal Reserve’s monetary policy path going ahead.
At 0943 IST, the dollar index, which measures strength in the greenback against a basket of six major currencies, was at 99.74 as against 99.88 on Monday. It was at 99.96 on Friday.
A rise in domestic share indices also provided support to the Indian unit, dealers said. At 0943 IST, both the Nifty 50 and Sensex were 0.2% up.
“We are expecting a narrow range of 81.95-82.10 (a dollar) today as the US (retail sales) data is lined up,” a dealer with a state-owned bank said. “There is buying interest from RBI and importers on every level above 82.00 (a dollar), so any level above 82.00 (a dollar) should not sustain.”
Dealers peg the immediate key technical support for the rupee at 82.20 a dollar. During the rest of the day, the rupee is seen in a range of 81.90-82.20 a dollar. (Pratiksha)
India Rupee: Expected range for rupee – Jul 18
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:
(Pratiksha)
End
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Vandana Hingorani
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