Informist, Tuesday, Aug 8, 2023
By Kabir Sharma
MUMBAI – The rupee ended lower against the dollar today as banks bought the greenback on behalf of oil marketing companies, dealers said. A broad-based strength in the US unit also weighed on the rupee, they said.
“Oilers were buying as there are concerns of prices going above $85 a bbl soon. We will wait to see the (US) inflation data and if it comes hot then it (rupee/dollar) can break the resistance of 82.85 (a dollar) first and then 82.95,” a dealer at a large state-owned bank said.
After trading in a very narrow range of 6 paise throughout the day, the Indian currency settled at 82.8275 a dollar against Monday’s close of 82.7425 a dollar. The rupee had settled at an over five-month low of 82.8400 a dollar on Friday.
The rupee opened lower against the dollar today as the greenback strengthened globally after US Federal Reserve officials hinted at more rate hikes going ahead, dealers said.
In an interview with The New York Times on Monday, New York Fed President John C. Williams said the Fed will likely have to maintain a tight monetary policy stance for an extended period of time. He said the policy stance will depend on fundamentals that drive the economy, supply and demand side, and inflation.
The Fed official also said that rate cuts are too far ahead to talk about now. “I think it will depend on the data, and depend on what’s happening with inflation. The first half of next year is still a way off,” Williams said, adding that he expects inflation to fall to as much as 2.5% by the end of 2023.
At a separate event, Federal Reserve Governor Michelle Bowman said the combination of persistently high inflation and sustained economic growth suggests that further rate hikes are likely. “I supported raising the federal funds rate at our July meeting, and I expect that additional increases will likely be needed to lower inflation to the goal,” she said, referring to the central bank’s benchmark overnight interest rate, which is currently set in the range of 5.25-5.50%.
Market participants now await the US consumer price index-based inflation print for July, due Thursday, for fresh cues about the central bank’s monetary policy path going ahead.
Economists polled by Reuters expect the US consumer price index to have increased 0.2% on month in July, the same pace as in June. Moreover, core inflation is expected to rise 4.7% on an annual basis in July.
At 1602 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 102.50 as against 102.08 on Monday. It was at 102.01 on Friday.
The rupee moved in a narrow range throughout the day due to caution ahead of the release of the US inflation data, dealers said. Volumes in the currency market were also subdued, they said.
Some banks bought the greenback on behalf of oil marketing companies, which weighed on the rupee, dealers said.
Oil companies stocked up on the commodity fearing further depreciation in the rupee and as oil prices fell by over 1% during trade today, dealers said.
Prices of the black gold slumped after data showed China’s imports and exports fell more than expected in July. The weak data showed the slow post-COVID recovery for the world’s largest oil importer.
China’s imports contracted 12.4% on year in July, far more than projection of a 5% drop, while exports dropped by 14.5% on year compared to 12.5% fall forecast by a Reuters’ poll. The country’s oil imports were 10.29 mln bpd in July, down 18.8% from June, data showed.
The rupee was supported by some banks’ dollar sales for exporters, dealers said.
FORWARDS
Premiums on one-year dollar/rupee forward contracts ended higher tracking a fall in US Treasury yields, dealers said.
The yield on the benchmark 10-year US Treasury note fell as investors shifted their focus to US inflation data, to be released on Thursday.
Premiums on forwards of a currency pair are reflective of the interest rate differential between the two countries.
The premium on the one-year, exact-period dollar/rupee forward contract was at 138.77 paise as against 131.41 paise on Monday. On an annualised basis, the premium was at 1.66%, slightly higher from 1.61% Monday.
OUTLOOK
On Wednesday, the rupee will take cues from the dollar index and crude oil prices, dealers said.
However, the rupee is expected to remain in a narrow range ahead of the US CPI data, dealers said.
Dealers have pegged key technical support for the rupee at 82.90 a dollar. During the day, the rupee is seen in the range of 82.50-83.00 a dollar.
India Rupee – World FX:Australian dlr slumps on weak China trade data
NEW DELHI – The Australian dollar slumped 0.9% against the dollar today, tracking fall in the offshore Chinese yuan after data showed China’s imports and exports contracted more than expected in July.
China is Australia’s largest trading partner accounting for around 30% of Australia’s international trade.
China’s imports contracted 12.4% on year in July, far more than projection of a 5% drop, while exports dropped by 14.5% on year compared to 12.5% fall forecasted by a Reuters’ poll.
The dollar strengthened against its major peers around the globe as hawkish remarks of several US Federal Reserve officials hinted at more rate hikes.
The US Fed Governor Michelle Bowman said she feels the need for more interest rate hikes to tame inflation. The New York Fed President John William said the US central bank may maintain restrictive territory as it would determine the underlying fundamentals.
At 1514 IST, the dollar index, which measures the strength in the greenback against a basket of six major currencies, was at 102.39 as against 102.08 on Monday. It was at 102.01 on Friday.
The euro and pound sterling declined 0.2% and 0.3% against the greenback, respectively. (Ananya Chaudhuri)
India Rupee: In thin band ahead of US CPI; oil cos’ dlr buys weigh
MUMBAI – The rupee was in a narrow range against the dollar due to caution ahead of the release of the US inflation data, due Thursday, dealers said. Volumes in the currency market were also subdued, dealers said.
“The volumes are low because there is too much uncertainty. You won’t see much movement before the CPI (consumer price index),” a dealer with a large state-owned bank said. “There are oilers, of course, and some exporters are there, too, but largely the air is of caution,” he said.
Economists polled by Reuters expect the US consumer price index to have increased 0.2% on month in July, the same pace as in June. Moreover, core inflation is expected to rise 4.7% on an annual basis in July.
Today, some banks bought the greenback on behalf of oil marketing companies, which weighed on the rupee, dealers said. Oil companies bought the greenback fearing further appreciation in crude oil prices, they said.
However, some banks sold the greenback for exporters at 82.80-a-dollar level, which supported the rupee, dealers said.
Dealers have pegged the immediate key technical support for the rupee at 82.85 a dollar. During the day, the rupee is seen in the range of 82.50-83.00 a dollar. (Kabir Sharma)
India Rupee: Dn on Fed officials’ comments hinting at more rate hikes
MUMBAI – The rupee was down against the dollar today as the greenback strengthened after US Federal Reserve officials hinted at more rate hikes going ahead, dealers said.
In an interview with The New York Times on Monday, New York Fed President John C. Williams said the Federal Reserve will likely have to maintain a tight monetary policy stance for an extended period of time. He said the policy stance will depend on fundamentals that drive the economy, supply and demand side, and inflation.
The Fed official also said that rate cuts are too far ahead to talk about now. “I think it will depend on the data, and depend on what’s happening with inflation. The first half of next year is still a way off,” Williams said, adding that he expects inflation to fall to as much as 2.5% by the end of 2023.
At a separate event, Federal Reserve Governor Michelle Bowman said the combination of persistently high inflation and sustained economic growth suggests that further rate hikes are likely. “I supported raising the federal funds rate at our July meeting, and I expect that additional increases will likely be needed to lower inflation to the goal,” she said, referring to the central bank’s benchmark overnight interest rate, which is currently set in the range of 5.25-5.50%.
Market participants now await the US consumer price index-based inflation print for July, due Thursday, for fresh cues about the central bank’s monetary policy path going ahead.
At 0943 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 102.35 as against 102.08 on Monday. It was at 102.01 on Friday.
Dealers have pegged immediate key technical support for the rupee at 82.85 a dollar. During the day, the rupee is seen in the range of 82.50-83.00 a dollar. (Kabir Sharma)
India Rupee: Expected range for rupee – Aug 8
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)
India Rupee – Asia FX: Dn; dlr up on US Fed officials’ hawkish remark
NEW DELHI – Asian currencies fell against the dollar today as the dollar index rose after US Federal Reserve officials’ remarks stoked fears among investors that the US central bank may remain hawkish for a prolonged period.
US Fed Governor Michelle Bowman, speaking at Fed Listens event in Atlanta, said she felt more interest rate hikes were needed to adequately tame inflation.
New York Fed President John William, a permanent voting member of the US Federal Open Market Committee, said in an interview to The New York Times that the underlying inflation pressure has come down a bit, and the US Fed is nearing the peak of its rate hike cycle.
However, William added that the US central bank might need to keep the stance restrictive for some time, as this would determine the underlying fundamentals.
At 0818 IST, the dollar index, which measures the strength in the greenback against a basket of six major currencies, was at 102.28 as against 102.08 on Monday. It was at 102.01 on Friday
All Asian currencies fell in the range of 0.1-0.6% against the greenback. The South Korean won emerged as the worst-performing currency among its Asian peers, and was down 0.6% against the US unit.
The Chinese yuan fell 0.3% against the dollar before the release of the country’s trade statistics. China’s exports are expected to fall 12.5% on year in July from 12.4% in the previous month.
The Thai Baht was down 0.2% against the US unit after the country recorded a more-than-expected fall in its annual headline inflation in July. Data released on Monday showed that Thailand’s consumer price index-based inflation rose 0.38% on year in July against a 0.64% rise forecasted by a Reuters’ poll. (Ananya Chaudhuri)
End
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Aditya Sakorkar
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