Informist, Tuesday, Sep 26, 2023
By Ananya Chaudhuri
MUMBAI – After trading in a narrow range throughout the day, the rupee ended at an over one-week low against the dollar today as the dollar index was firm and importers bought the greenback, dealers said.
The Indian currency settled at 83.2300 against the US currency, compared to 83.1450 on Monday. The rupee moved in a tight range of 8 paise against the dollar throughout the day.
The local unit started the day lower against the greenback at 83.1900 as the dollar index rose to a near 10-month high tracking a surge in US Treasury yields, dealers said.
The yield on the benchmark 10-year US Treasury note jumped to a 16-year high on Monday due to expectations that the Federal Reserve may keep interest rates at higher levels for longer than initially anticipated.
The yields surged also because of rising expectation that issuance of new bonds would continue to increase as the government grapples with growing budget deficits.
The yield on the benchmark 10-year US Treasury note settled at 4.55% on Monday compared to 4.44% on Friday.
The dollar index has been rising since the start of this month because of a slew of better-than-expected US economic data and Fed’s hawkishness. The index was at 105.94 at 1720 IST, as against 105.95 on Monday and 105.58 on Friday. The index rose to a high of 106.20 during the day.
Fall in Asian currencies also weighed on the Indian currency, dealers said. The currencies fell in the range of 0.1-1.0% against the greenback.
Shortly after opening, the rupee fell to the day’s low of 83.2500 against the dollar as banks rushed to buy the greenback on behalf of importers.
“Importers were buying (dollars) because they were expecting it (rupee) to fall further. But resistance was there around 83.25 (a dollar) level. The moment it (rupee) reached those levels, selling (of dollars) started to come,” said a dealer at a state-owned bank.
Banks stepped in to sell dollars likely on behalf of the Reserve Bank of India to prevent the rupee from breaching the record low level of 83.29 against the US unit, which limited losses for the rupee, dealers said.
Dealers said banks also sold the US currency on behalf of exporters who wanted to benefit from a relatively higher level of the dollar/rupee.
“Exporters covered a lot today cause it (rupee) was on the depreciating side,” a dealer at a private bank said. “We’re seeing a chance of it (rupee) breaching 83.30 (a dollar) in the near term, because the dollar index is around 106.00 level, and crude prices are up.”
For most part of the day, the Indian currency traded in a tight range of 8 paise against the US unit as dollar sales by banks, likely for the RBI and exporters, offset the impact of greenback purchases by importers.
FORWARDS
Premiums on one-year dollar/rupee forwards retreated from a near three-month-high and ended lower tracking sharp gains in US Treasury yields, dealers said.
The benchmark 10-year US Treasury note yield rose to the highest level since 2007 on concerns that the US Federal Reserve may keep interest rates higher for a longer period. The surge in yields was also because of rising expectation that issuance of new bonds would continue to increase as the government grapples with growing budget deficits.
Premiums on forwards of a currency pair are reflective of the interest rate differential between the two countries.
Premium on the one-year dollar/rupee contract was 149.50 paise, against 151.17 paise on Monday. On an annualised basis, the premium was at 1.79%, against the previous close of 1.80%.
OUTLOOK
On Wednesday, the rupee will take cues from the dollar index and crude oil prices, dealers said.
“The rupee will be in a range of 83.00-83.30 tomorrow as FPI outflows and oil buying continue and Asian currencies remain on the weaker side of the curve. RBI to be keenly watched,” said Anil Kumar Bhansali, head of treasury and executive director, Finrex Treasury Advisors LLP.
Dealers have pegged key technical support for the rupee at 83.30 a dollar. During the day, the rupee is seen in the range of 82.80-83.30 a dollar.
India Rupee – World FX: Dlr remains strong as US ylds up; sterling dn
MUMBAI – The dollar continued to gain strength against almost all major currencies today after US Treasury yields soared, with the yield on the benchmark 10-year note hitting a 16-year high during intraday on Monday. After touching the high, the yield on the benchmark 10-year US Treasury note settled at 4.55% on Monday.
The Australian dollar and Canadian dollar were hit the most, down 0.26% and 0.25% against the dollar, respectively. Australia’s economic output might be reduced by $1.2 bln a year due to climate change, said the country’s Treasurer Jim Chalmers today.
The fall in crude prices further strengthened the greenback against major currencies. The Canadian dollar fell, tracking the crude oil prices as the commodity constitutes the major portion of the country’s exports.
Pound sterling was also down 0.20% against the dollar. On the contrary, the euro was marginally up against the dollar, by 0.09%.
The dollar index was at 106.02 at 1707 IST, against 105.92 on Monday and 105.58 on Friday. The index rose to a high of 106.20 during the day. The US Federal Reserve’s higher-for-longer stance gave the greenback a boost against other currencies. The Fed is expected to hike rates once more by the end of the year.
Chicago Federal Reserve President Austan Goolsbee said on Monday that achieving the Fed’s 2% inflation target is more important than tight central bank policy slowing the economy. (Sourabh Kumar and Vaishali Tyagi)
India Rupee: In narrow range; banks’ dlr sales likely for RBI support
MUMBAI – The rupee traded in a narrow range of 8 paise against the dollar as banks’ greenback sales likely for the Reserve Bank of India absorbed importers’ dollar purchases, dealers said.
Dealers said banks sold the US currency likely for the RBI to prevent the rupee from breaching record low level of 83.29 against the US unit.
Further, banks also rushed to sell the greenback on behalf of the exporters who wanted to take the benefit of a relatively higher dollar/rupee level, dealers said.
“Slowly it (rupee) has come up from 83.25 (a dollar) level; anywhere below 83.20 level there’s resistance. Exporters are also booking cause for them, the levels (of dollar/rupee) are good,” a dealer at a state-owned bank said.
However, banks purchased the US currency on behalf of importers who expected the Indian currency to depreciate further going forward, which weighed on the local unit, dealers said.
The dollar index traded near a 10-month high, which exerted pressure on the Indian unit. The index surged to a near 10-month high on Monday, tracking sharp gains in yields on the benchmark 10-year US Treasury notes, dealers said. A combination of solid economic growth and hawkish Federal Reserve commentary also supported the dollar index.
The dollar index, which measures the value of the greenback against a basket of six major currencies, was at 105.97 at 1414 IST, as against 105.95 on Monday and 105.58 on Friday. The index rose to a high of 106.20 during the day.
Dealers see key immediate technical support for the rupee at 83.30 a dollar. During the day, the rupee is seen in the range of 82.90-83.30 a dollar. (Ananya Chaudhuri)
India Rupee: Dn as dlr rises on surge in US ylds; RBI’s dlr sales aid
MUMBAI – The rupee was down against the dollar as the greenback rose to a near 10-month high, following a surge in US yields, dealers said. However, banks’ dollar sales on behalf of the Reserve Bank of India, limited losses for the rupee, dealers said.
“The dollar is rising, and you can see the US Treasury yields level is also up, the sentiment is of depreciation for the rupee,” a dealer at a state-owned bank said.
The dollar index surged to a near 10-month high, supported by the surge in yield on the benchmark 10-year US Treasury note, dealers said. A combination of solid economic growth and supportive Federal Reserve commentary also supported the dollar index.
Chicago Federal Reserve President Austan Goolsbee said on Monday that inflation staying above the Fed’s 2% target remains a greater risk than tight central bank policy slowing the economy more than needed.
Other Fed officials also spoke about keeping rates higher for longer, which also supported the greenback.
Some dealers said state-owned banks sold the dollar on behalf of the RBI, which supported the Indian unit.
Dealers said the RBI likely sold the greenback in the offshore non-deliverable forward market to prevent a sharp depreciation in the Indian unit, and to prevent it from hitting a record low.
Dealers see key immediate technical support for the rupee at 83.20 a dollar. During the day, the rupee is seen in the range of 82.80-83.20 a dollar. (Kabir Sharma)
India Rupee – Asia FX:Dn as dollar index surges on rise in US yields
MUMBAI – Almost all Asian currencies weakened against the dollar after US Treasury yields soared, with the yield on the 10-year benchmark T-bill hitting a 16-year-high.
The dollar index rose to its highest level in nearly 10 months. The US Federal Reserve’s higher-for-longer stance gave the greenback a boost against other currencies, as the Fed is expected to hike rates once more by the end of the year.
At 0927 IST, the dollar index was at 106.07, supported by higher US bond yields. It was at 105.95 on Monday.
The South Korean won fell 0.72%, the most against the dollar among its Asian peers, due to a drop in the Composite Consumer Sentiment Index. The index which measures how optimistic consumers feel about the state of the economy, was at 99.7 in September, down 3.4 points from August, data released by Bank of Korea today showed.
Consumer sentiment in South Korea came in at its lowest level since May after three straight months of improvement amid woes over an economic slowdown, slumping exports, and weakened spending power.
The Thai baht fell 0.44% against the dollar on account of a strong greenback and expectations of Thailand’s central bank keeping the policy rate unchanged at 2.25% at its policy meeting on Wednesday.
The Taiwanese dollar and the Philippines peso fell 0.24% and 0.20% against the US currency, respectively, as market participants await the US Core Personal Consumption Expenditure Price index, which the Federal Reserve uses to measure consumer inflation. (Sourabh Kumar and Vaishali Tyagi)
India Rupee: Expected range for rupee – Sep 26
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 Ashish Shirke
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