Informist, Tuesday, Oct 17, 2023
By Ananya Chaudhuri
MUMBAI – The rupee ended steady against the dollar today as sales of the greenback, likely on behalf of the Reserve Bank of India, balanced out dollar purchases by banks for oil marketing companies and other importers, dealers said.
Today, the Indian currency settled at 83.2575 against the US currency, compared to 83.2675 a dollar on Monday. It traded in a tight range of 5 paise against the dollar throughout the day.
The Indian currency opened slightly higher against the greenback at 83.2300 as both crude oil prices and the dollar index declined overnight.
Prices of crude oil fell over 1% on Monday due to rising expectations that the US and Venezuela would soon reach a deal on easing sanctions on the latter’s crude oil exports. Moreover, the Israel-Hamas war is not expected to threaten oil supplies in the near term, according to market participants.
A fall in crude oil prices reduces India’s import bill, which supports the Indian currency.
At 1655 IST, the December contract of Brent crude oil on the Intercontinental Exchange was at $90.11 a bbl, as against $89.65 a bbl on Monday. It was at $90.89 a bbl on Friday. Oil prices declined as much as $89.22 during the day.
The dollar index fell 0.2% overnight as investors assessed the state of the US economy in the backdrop of uncertainty over the Federal Reserve’s monetary policy going ahead, as well as geopolitical concerns in West Asia.
Investors are waiting for US retail sales data, due later today, which will provide cues on the world’s largest economy before the US Federal Open Market Committee’s meeting.
Market participants will closely monitor speeches by US Fed officials, especially Fed Chair Jerome Powell, at the US Economic Club of New York event, for guidance on the central bank’s monetary policy outlook. The central bank’s rate-setting panel is scheduled to deliver its interest rate decision on Nov 1, at the end of a two-day meeting.
According to CME FedWatch tool, Fed fund futures traders see a 90.1% chance of a pause at the Fed’s November policy review meeting, while 9.9% expect a 25-basis-point rate hike. The current Federal funds rate is 5.25-5.50%.
At 1656 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 106.21, as against 106.21 on Monday. It was at 106.67 on Friday.
The Indian currency touched the day’s low of 83.2650 against the greenback as banks bought dollars on behalf of oil marketing companies that wanted to benefit from a decline in crude oil prices, dealers said.
“Volume is low today, mostly importers are there. Also, it (rupee) is maintained in a narrow range and most likely it will breach 83.30 (a dollar) mark. Moreover, concerns about oil prices are also putting pressure on rupee,” a dealer at a big state-owned bank said.
Banks, however, rushed to sell the greenback on behalf of the RBI to prevent the rupee from breachign its lifetime low of 83.29 against the US unit, which supported the local unit, dealers said.
Gains in domestic equity indices also supported the local unit, dealers said. Today, both the benchmark Nifty 50 and the Sensex ended 0.4% higher.
The rupee moved in a tight range against the dollar throughout the day as traders exercised caution before Powell’s speech on Thursday. “Not much movement (of rupee) — it has been more than a week or so. It (small range) will sustain for another two-three days, then the rupee has to move in some direction,” a dealer at a state-owned bank said.
FORWARDS
The premium on one-year dollar/rupee forward contracts ended near a six-week low today as banks sold dollars for forward delivery ahead of the maturity of the Reserve Bank of India’s sell/buy swap of $5 bln on Monday, dealers said, adding that concerns of a dollar shortage in the system have led to a slump in forward premiums this week.
However, a small section of the market expects the central bank to roll over the sell/buy swap to avoid injecting rupee liquidity into the banking system.
A rise in US Treasury yields also exerted pressure on premiums, dealers said. US Treasury yields rose on Monday as the US government increased its debt issuance. Meanwhile, the conflict in West Asia has kept the bond market in a wait-and-watch mode.
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 142.47 paise, against 142.26 paise at close on Monday. On an annualised basis, the premium was at 1.70%, against its previous close of 1.71%.
OUTLOOK
On Wednesday, the rupee will take cues from movement in the dollar index and crude oil prices, dealers said.
Market participants will closely monitor Fed officials’ speeches at the US Economic Club of New York event, for further cues on the central bank’s rate trajectory.
Dealers have pegged key technical support for the rupee at 83.30 a dollar, a breach of which could push the rupee to 83.50 a dollar. During the day, the rupee is seen in the range of 83.00-83.50 a dollar.
India Rupee – World FX: Sterling down on weak wage data, UK CPI eyed
MUMBAI – The pound sterling fell 0.4% against the dollar as private sector wage growth in the UK fell to 8% on year in August, down from 8.5% in July. Market participants now await the country’s inflation data for September, due Wednesday.
The Canadian dollar fell 0.2% against the dollar ahead of the country’s yearly CPI data, scheduled to be released later today, expected to be at 4%, the same level as in August.
The Japanese yen slipped 0.1% against the greenback after Japan’s trade and industry minister raised concerns over rising energy prices. He said that the country is monitoring international energy prices with a “tense atmosphere”, as further spike in energy prices could affect the Japanese economy, which is already struggling with inflation.
The euro remained flat against the dollar. The governing council of the European Central Bank decided to hold an additional non-monetary policy meeting virtually on Wednesday, where it will likely discuss the future of the digital Euro.
Meanwhile, the Australian dollar strengthened 0.2% against the greenback. The Reserve Bank of Australia’s Oct 3 policy meeting minutes, released today, showed that the bank’s board considered raising rates in its previous meeting due to concerns about persistent inflation, but deferred hikes on insufficient information.
Market participants look forward to speeches by US Federal Reserve officials this week, especially that of Fed Chair Jerome Powell for forward guidance of the central bank’s monetary policy outlook.
On Monday, Chicago Fed President Austan Goolsbee said it is “undeniable” that the slowdown in US inflation is a trend rather than a momentary blip, despite a recent string of economic data showing persistent pressure on some prices, as per a Financial Times report.
At 1633 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 106.34 against 106.21 on Monday. It was at 106.67 on Friday. (Vaishali Tyagi and Sourabh Kumar)
India Rupee: Premiums down as bks sell dlrs on dlr shortage worries
NEW DELHI – Premium on one-year dollar/rupee forward contracts fell slightly as banks sold dollars for forward delivery ahead of the maturity of Reserve Bank of India’s sell/buy swap of $5 bln on Monday, dealers said, adding that concerns of a dollar shortage in the system has led to a slump in forward premiums this week.
“It is unlikely that the RBI will roll over the swap, so we are seeing receiving due to that,” said a dealer with a big state-owned bank. “The market is a bit worried at the moment, considering there is already cash shortage in the market.”
However, a small section of the market expects the central bank to roll over the sell/buy swap to avoid injecting rupee liquidity into the banking system.
A rise in US Treasury yields also pressured the premiums, dealers said. US Treasury yields rose on Monday as the US government increased debt issuance. Meanwhile, the conflict in West Asia kept the bond market in a wait-and-watch mode.
Premiums on forwards of a currency pair are reflective of the interest rate differential between the two countries.
At 1500 IST, premium on the one-year, exact-period dollar/rupee forward contract was at 142.97 paise, unchanged from Monday. On an annualised basis, the premium was at 1.70%, against its previous close of 1.71%. (Pratiksha)
India Rupee: In thin band amid low volume before Powell’s speech Thu
MUMBAI – The rupee traded in a narrow range of 5 paise against the dollar amid low volume as traders refrained from placing fresh bets on caution ahead of US Federal Reserve officials’ speeches later this week, dealers said.
Market participants will closely monitor speeches by US Fed officials, especially by Fed Chair Jerome Powell, at an US Economic Club of New York event, for forward guidance of the central bank’s monetary policy outlook. The US central bank’s rate-setting panel is scheduled to deliver its interest rate decision on Nov 1 at the end of its two-day meeting.
According to CME FedWatch tool, Fed fund futures traders expect 90.1% chance of a pause in the Fed November policy review meeting, while 9.9% expect a 25-basis-point rate hike. The current Federal Fund rate is 5.25-5.50%.
Investors are also waiting for US retail sales data, due later today, which will provide cues about the world’s largest economy before the US Federal Open Market Committee meeting.
At 1349 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 106.37 against 106.21 on Monday. It was at 106.67 on Friday.
“The rupee is again in a very narrow range, maybe because PSUs (public sector units) are there on the lower side and on the higher side again buyers are there,” a dealer at a big state-owned bank said. “For the day also, we are expecting the same range to continue. On the lower side, 83.27-83.28 (a dollar) should hold,” dealer at a big state-owned bank said.
Dealers speculated that banks might have sold the greenback likely on behalf of the Reserve Bank of India to prevent the rupee from depreciating below the record low level of 83.29 against the US unit.
Gains in local share indices supported the Indian unit, dealers said. At 1349 IST, both the benchmark Sensex and Nifty were 0.5% up.
Meanwhile, some banks stepped in to purchase the greenback on behalf of importers, which exerted pressure on the Indian currency, dealers said.
Dealers see 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. (Vaishali Tyagi and Sourabh Kumar)
India Rupee – Asia FX: Most up on weak dollar index; Thai baht falls
MUMBAI – Most Asian currencies rose against the greenback after the dollar index weakened as investors were cautious of the US economic outlook amid uncertainty over the monetary policy path.
Market participants look forward to speeches by US Federal Reserve officials this week, especially that of Fed Chair Jerome Powell for forward guidance of the central bank’s monetary policy outlook.
On Monday, Chicago Fed President Austan Goolsbee said it is “undeniable” that the slowdown in the US inflation is a trend rather than a momentary blip, despite a recent string of economic data showing persistent pressure on some prices, as per a Financial Times report.
The dollar index, which measures the strength of the greenback against a basket of six major currencies, declined to as much as 106.21 today. At 1041 IST the index was at 106.34 against 106.21 on Monday. It was at 106.67 on Friday.
The South Korean won rose slightly by 0.1% against the greenback ahead of its Monetary policy meeting, due Thursday.
The Philippine peso rose 0.1% against the US currency as personal remittances from overseas rose 2.8% on-year in August to $3.1 bln, according to Bangko Sentral ng Pilipinas, the central bank of the Philippines.
The Malaysian ringgit also strengthened 0.1% against the greenback as Malaysian Rating Corporation Bhd iterated other agencies’ expectation of the country’s real GDP growth from 4-5% in 2024, with the manufacturing sector as the key driver.
The Indonesian rupiah was flat against the US unit. Bank of Indonesia is expected to leave its interest rate unchanged in its upcoming Monetary policy meeting, due Thursday, according to a Reuters poll.
The Taiwan dollar remained steady against the dollar on economic growth forecast by the country’s National Development Council. The council said on Monday that the country’s GDP is expected to grow about 1.5% in 2023 on an improving export-oriented manufacturing sector, as against the International Monetary Fund’s 0.8% growth forecast.
Meanwhile, the Thai baht fell 0.6%, against the dollar, and declined the most among its Asian peers, after a sharp fall in domestic equities. The Thai equity market has fallen sharply, in line with global stock markets due to concerns about the possibility of powers outside West Asia getting dragged into the Israel-Hamas war. (Vaishali Tyagi and Sourabh Kumar)
India Rupee: Tad up on ease in crude prices, weak dlr index supports
MUMBAI – The rupee was a tad higher against the dollar, supported by a fall in crude oil prices and a weaker dollar index, dealers said.
Prices of crude oil fell over 1% on Monday on expectation that the US and Venezuela could soon reach a deal easing sanctions on Venezuelan crude exports. Also, the Israel war is not expected to threaten oil supply in the near term, according to market participants.
A fall in crude oil prices decreases India’s import bill, which subsequently supports the Indian currency.
At 0935 IST, the December contract of Brent crude oil on the Intercontinental Exchange was at $89.60 a bbl, against $89.65 a bbl on Monday. It was at $90.89 a bbl on Friday.
Separately, US Federal Reserve Philadelphia President Patrick Harker on Monday said that the Fed’s interest rate hikes were an important factor in the home price surge.
He also reiterated that the US rate-setting panel doesn’t need to raise rates again this cycle, while also affirming his commitment to fighting inflation.
At 0943 IST, the dollar index, which measures the strength in the greenback against a basket of six major currencies, was at 106.30 against 106.21 on Monday. It was at 106.67 on Friday.
Moreover, market participants are cautious ahead of the maturity of RBI’s sell/buy swap of $5 bln on Monday, which may reduce dollar liquidity further.
“…there is a fear that the RBI might not roll over these dollars it takes delivery of, and this scenario could potentially result in $5 bln being withdrawn from the banking system,” said Amit Pabari, the managing director, CR Forex.
Dealers see 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. (Kabir Sharma)
India Rupee: Expected range for rupee – Oct 17
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 Avishek Dutta
For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.
Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.
Informist Media Tel +91 (22) 6985-4000
Send comments to [email protected]
© Informist Media Pvt. Ltd. 2023. All rights reserved.
Source: Cogencis
