Informist, Friday, Sep 29, 2023
By Ananya Chaudhuri
MUMBAI – The rupee ended at a one-week high against the dollar today as the dollar index fell from a 10-month high, and as banks sold the greenback for foreign portfolio investors and exporters, dealers said.
The rupee closed 0.2% higher at 83.0400 a dollar against 83.1850 on Thursday. The Indian currency had fallen to a low of 83.25 during the week, just shy of the record intraday low of 83.29 a dollar on Oct 20.
For the month, the rupee fell 0.3% against the dollar, tracking a sharp rise in the dollar index and crude oil prices. Rise in the 10-year US Treasury note yield to a multi-year high this week also exerted pressure on the rupee.
However, the rupee’s fall against the dollar was lesser than its Asian peers, as banks persistently sold the greenback on behalf of the Reserve Bank of India. Asian currencies depreciated in the range of 0.3-2.0% this month.
The rupee opened higher against the greenback at 83.1350 as the dollar index came off a 10-month high following a fall in US Treasury yields. The benchmark 10-year US Treasury bond yield came off a multi-year-high and settled at 4.59% on Thursday from the previous day’s close of 4.61%.
Market participants are now waiting for the US Personal Consumption Expenditures Price Index, due later today. The index, a preferred inflation gauge of the US Federal Reserve, is expected to have remained steady at 0.2% in August.
At 1725 IST, the dollar index, which measures the strength of the greenback against its major peers, was at 105.82 as against 106.13 on Thursday. The index was at 106.67 on Wednesday.
The rupee rose to the day’s high of 83.0225 as banks stepped in to sell dollars on behalf of foreign portfolio investors looking to invest in domestic equities. “Equities were trading 0.8% higher today after trading negative. And, easing US yields, and correction in the US dollar has turned sentiment on the risk-on side,” said Amit Pabari, managing director and chief executive officer of CR Forex.
The Nifty 50 and Sensex ended 0.6% and 0.5% higher, respectively. On Thursday, the benchmark indices had closed 1.0% and 0.9% lower, respectively.
Dollar sales by exporters for their month-end payment needs supported the Indian currency further, dealers said. However, dollar purchases by oil marketing companies limited the gains of the rupee.
On Thursday, crude oil prices eased from a 10-month high as traders are worried that high interest rates may dent demand for the commodity. This also provided support to Asian currencies. A fall in crude oil prices reduces the import bill of Asian countries, thus supporting their currencies.
At 1726 IST, the November contract of Brent crude oil on the Intercontinental Exchange was at $96.04 a barrel against $95.4 a bbl on Thursday. It was at $96.6 a bbl on Wednesday. The prices fell as much as $94.90 during the day.
“After the recent upbeat move (in dollar index, US treasury yields), some profit-booking had come across the asset spaces which translated into India as well. Crude oil prices have come off a bit. So, factors were slightly positive, but don’t see any runaway move in the dollar/rupee,” a dealer at private bank said.
The rupee moved in a narrow range of 11 paise against the dollar throughout the day. Volumes in the currency market were low today on account of Eid-e-Milad holiday in Maharashtra, dealers said.
FORWARDS
Premiums on dollar/rupee forwards ended largely steady on caution before the release of US Personal Consumption Expenditure Index later today, dealers said.
The index, a preferred inflation gauge of the Federal Reserve, is expected to provide cues about the central bank’s rate hike trajectory going forward. The market expects the index to remain steady at 0.2% on month in August.
Premiums on forwards of a currency pair are reflective of the interest rate differential between the two countries.
Market participants see strong technical support for the one-year dollar/rupee forward contract at 2.00%.
The premium on the one-year, exact-period dollar/rupee forward contract was at 151.85 paise, against 152.64 paise at close Thursday. On an annualised basis, the premium was at 1.82%, against its previous close of 1.83%.
OUTLOOK
On Tuesday, the rupee will take cues from the dollar index and crude oil prices, dealers said. Indian financial markets are closed Monday on account of Gandhi Jayanti.
Market participants are keenly waiting for the US Personal Consumption Expenditure Index.
Dealers have pegged key technical resistance for the rupee at 82.90 a dollar. During the day, the rupee is seen in the range of 82.80-83.30 a dollar.
India Rupee:Remains up on dlr sales for FPIs, exporters; volumes low
MUMBAI – The rupee remained higher against the dollar today as banks stepped in to sell the greenback on behalf of exporters and foreign portfolio investors, dealers said.
“Today, because of month-end activity, inflows (of dollars) are there, both from the general exporters and equity side. Oilers were also buying (dollars), but not much,” said a dealer at a foreign bank. “We are expecting it (rupee) to be in the range of 83.00-83.15 (a dollar).”
Dealers said banks sold the US unit for foreign portfolio investors looking to invest in domestic equity markets, which supported the local unit. At 1343 IST, the benchmark Nifty 50 and the Sensex were up 0.8% and 0.7%, respectively.
The dollar index fell below the psychologically crucial level of 106.00, as investors booked profits, which also supported the Indian unit, dealers said.
Market participants now await the US Personal Consumption Expenditures Price Index, a preferred inflation gauge of the US Federal Reserve, due later today. Traders expect the index to remain steady at 0.2% for August.
At 1343 IST, the dollar index was at 105.77, against 106.13 on Thursday and 106.67 on Wednesday. The index had hit a 10-month high of 106.84 on Wednesday.
Banks also purchased the greenback on behalf of oil marketing companies that wanted to benefit from relatively lower dollar/rupee levels, which limited gains for the local unit, dealers said.
So far today, the rupee has moved in a narrow range of 10 paise against the dollar. Volumes in the currency market were low today on account of Id-e-Milad holiday in Maharashtra, dealers said.
Dealers see immediate technical resistance for the rupee at 83.00 a dollar. During the day, the rupee is seen in the range of 83.00-83.30 a dollar. (Ananya Chaudhuri)
India Rupee – Asia FX: Most up as dollar index eases from 10-mo high
MUMBAI – Most Asian currencies rose against the dollar as the dollar index fell from near a 10-month high on Thursday. Market participants now await the US Personal Consumption Expenditures Price Index, due to be released later today.
The index is the preferred inflation gauge of the US Federal Reserve, and is expected to provide cues about the central bank’s rate hike trajectory going forward. Traders expect the index to remain steady at 0.2% in the month of August.
Meanwhile, the number of people filing for initial state unemployment benefits in the US rose 2,000 to a seasonally adjusted 204,000 for the week ended Saturday, data from the US Labor Department showed. Economists had projected 215,000 claims for the latest week.
Additionally, a third estimate of US GDP showed the world’s largest economy grew at an unrevised pace of 2.1% a year in Apr-Jun, in line with economists’ expectations. The personal consumption rate for Apr-Jun was revised down to 0.8% from the earlier reported 1.7%.
Further, the US benchmark 10-year treasury bond yields fell to 4.59% on Thursday from the previous day’s close of 4.61%, which also supported Asian currencies.
At 1043 IST, the dollar index was at 106.02 as against 106.13 on Thursday. The index was at 106.67 on Wednesday.
On Thursday, crude oil prices eased from a 10-month high as traders remained worried that high interest rates may dent demand for the commodity. This also provided support to Asian currencies. A fall in crude oil prices reduces Asian countries’ import bill, thus supporting the currencies.
At 1043 IST, the November contract of Brent crude oil on the Intercontinental Exchange was at $95.1 a barrel as against $95.4 a bbl on Thursday. It was at $96.6 a bbl on Wednesday.
The South Korean won rose the most against the greenback and was up by 0.5%. The Philippines peso also rose 0.5% against the US unit as its central bank governor indicated that it is open to an unscheduled rate hike.
The Malaysian ringgit and Indonesian rupiah rose 0.4% and 0.2%, respectively, against the dollar. (Sourabh Kumar and Vaishali Tyagi)
India Rupee: Rises as dollar index eases from 10-month high
MUMBAI – The rupee rose against the dollar today as the dollar index came off a 10-month high ahead of the release of the US Personal Consumption Expenditures Price Index, due later today, dealers said.
The index, which is the preferred inflation gauge of the US Federal Reserve, is expected to provide cues about the central bank’s rate hike trajectory going forward. The market expects the index to remain steady at 0.2% on month for August.
Meanwhile, the number of people filing for initial state unemployment benefits in the US rose 2,000 to a seasonally adjusted 204,000 for the week ended Saturday, data from the US Labor Department showed. Economists had projected 215,000 claims for the latest week.
In the last few days, the dollar index shot up on expectations that interest rates will remain high in the US. Further, the Federal Reserve hinted at one more rate hike by the end of 2023, and this also supported the greenback’s upward movement.
At 0934 IST, the dollar index was at 106.04 as against 106.13 on Thursday. It was at 106.67 on Wednesday. The index hit a 10-month high of 106.84 on Wednesday.
Further, crude oil prices fell as much as 1%, easing from a 10-month high on Thursday as traders worried that high interest rates could dent the demand for the commodity. At 0935 IST, the November contract of Brent crude oil on the Intercontinental Exchange was at $95.43 a barrel, as against $95.38 a bbl on Thursday. It was at $96.55 a bbl on Wednesday.
A rise in local share indices also supported the Indian unit, dealers said. At 0936 IST, both the benchmark Nifty 50 and Sensex were up 0.2%.
“We’re expecting it (rupee) to move anywhere between the figure (83.00 a dollar) and 83.25 today. Importers’ buying could be there because for last two-three days it (rupee) was down, so these are decent rates,” a dealer at a state-owned bank said. “It (trade volumes) will be muted.”
Dealers said volumes in the currency market may remain lacklustre due to the holiday today on account of Eid-e-Milad in Maharashtra.
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 83.00-83.30 a dollar. (Ananya Chaudhuri)
India Rupee: Expected range for rupee – Sep 29
MUMBAI – 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 Ashish Shirke
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