Informist, Friday, Nov 17, 2023
By Pratiksha and Sourabh Kumar
MUMBAI – The rupee ended slightly lower against the dollar today due to persistent dollar purchases by oil marketing companies and importers, dealers said. This was despite state-owned banks’ dollar sales, likely on behalf of the Reserve Bank of India, and a sharp decline in crude oil prices, dealers said.
“There is a lot of demand in the market, especially oilers (oil importers), after oil prices fell,” said a dealer with a state-owned bank. “On the other side, nats (nationalised banks) are on offer for RBI.”
State-owned banks sold the greenback, likely on behalf of the central bank, to prevent a sharp depreciation in the rupee and manage any volatility in the currency market, dealers said.
After moving in a tight range of 6 paise today, the Indian unit settled at 83.27 a dollar today. It had settled at 83.2325 a dollar on Thursday.
The rupee opened flat against the greenback as the dollar index was broadly steady after data showed US jobless claims data rose more than expected. Weekly jobless claims in the US increased by 13,000 to 231,000 in the week ended Nov 11, a three-month high, suggesting that the labour market was gradually cooling and assisting the Federal Reserve in its fight against inflation. The rise in initial claims for state unemployment benefits in the US was 11,000 more than Reuters’ forecast of 220,000 claims.
With such data indicating cooling-off of the economy, almost 49% of traders expect the Fed to cut rates by May next year, according to the CME Group’s FedWatch Tool.
At 1635 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was steady at 104.07, compared with 104.37 on Thursday. It was at 104.38 on Wednesday.
Shortly after opening, the rupee was pressured by banks’ dollar purchases on behalf of importers, who considered the levels relatively attractive, dealers said.
Further, banks bought dollars on behalf of oil marketing companies, noting the sharp fall in crude oil prices, which also weighed on the Indian unit, dealers said.
Crude oil prices fell around 5% on Thursday, as US crude stockpiles rose and China showed signs of easing oil demand from the industrial sector. The US Energy Information Administration said US crude oil stocks rose by 3.6 mln barrels last week to 421.9 mln barrels, way above analysts’ expectations in a Reuters poll.
At 1635 IST, the January contract of Brent Crude Oil on the Intercontinental Exchange was at $78.23 a barrel against $77.42 a bbl on Thursday. The current crude oil price is much lower than $81.18 a bbl on Wednesday.
However, state-owned banks stepped in to sell the greenback on behalf of the central bank, which limited losses for the Indian unit, dealers said.
“With oil down and it being mostly a risk-on sentiment, yet rupee could not gain due to constant buying of dollars by importers while RBI constantly protected it from crossing 83.30 yet again,” said Anil Kumar Bhansali, head of treasury and executive director, Finrex Treasury Advisors LLP.
However, as importers of oil and other commodities stepped up their dollar purchases, the rupee fell to the day’s low of 83.2775 a dollar.
A fall in domestic equity indices also weighed on the Indian unit, dealers said. The Sensex and the Nifty 50 today ended 0.3% and 0.2% lower, respectively.
FORWARDS
Premiums on one-year dollar/rupee forwards ended at an over one-week high as US Treasury yields fell after data showed that US jobless claims rose more than expected last week, dealers said.
Premiums on forwards of a currency pair are reflective of the interest rate differential between the two countries.
However, banks sold the greenback for forward delivery due to concerns of a dollar shortage in the system, which limited gains for the premiums.
The premium on the one-year, exact-period dollar/rupee forward contract was at 131.98 paise, against 129.64 on Thursday. On an annualised basis, the premium was at 1.58%, against the previous close of 1.55%.
OUTLOOK
On Monday, the rupee will take cues from movement in the dollar index and crude oil prices, dealers said.
“Looking at the intervention (by RBI) today, it seems like we are in for the same range of 83.00-83.30 for next week,” said a dealer with a big state-owned bank.
Dealers expect the RBI to continue selling dollars to prevent the rupee from runaway depreciation.
Dealers have pegged key technical resistance for the rupee at 82.80 a dollar and technical support at 83.50 a dollar. During the day, the rupee is seen in the range of 83.00-83.30 a dollar.
India Rupee – World FX: Pound sterling down on weak retail sales data
MUMBAI – The pound sterling fell 0.2% against the dollar as retail sales volumes in the UK dropped 0.3% on month in October, following a revised 1.1% decline in September, data from the Office for National Statistics showed. The numbers for October dropped against economists’ expectation of an on-month rise of 0.3%, expected in a Reuters poll.
The euro was down 0.1% against the US unit, as investors await finalised eurozone inflation figures for October. Preliminary figures showed that the Eurozone annual inflation rate softened to 2.9% from 4.3% for the same month.
The dollar index was broadly flat after data showed US jobless claims rose more than expected. The weekly jobless claims increased 13,000 to 231,000 in the week ended Nov 11, which was at a three-month high, suggesting that the labour market was gradually cooling and assisting the US Federal Reserve in its fight against inflation. The rise in initial claims for state unemployment benefits in the US was 11,000 more than Reuters’ forecast of 220,000 claims for the reported week.
With such data indicating a cooling off of the economy, over 49% of traders expect the Fed to cut fed funds rates by May next year, according to the CME Group’s FedWatch Tool.
The dollar index has been steady for over two days now, and at 1424 IST the dollar index was 104.38, compared to 104.37 on Thursday. The index, which measures the strength of the greenback against a basket of six major currencies, was at 104.38 on Wednesday.
Investors now await the US housing data due later today. (Sourabh Kumar)
India Rupee: In thin band; RBI’s dlr sales offset oil cos’ dlr buys
MUMBAI – The rupee moved in a thin band against the dollar as state-owned banks’ dollar sales, likely on behalf of the Reserve Bank of India, offset the impact of dollar purchases by oil marketing companies and importers, dealers said.
“Some oilers (oil importers) were present, but RBI was also there, and so overall, the level is stuck, not much movement. There are also not big flows as equity is stable,” a dealer at a private bank said.
So far today, the rupee has moved in just a five paise range of 83.2250–83.2750 a dollar.
Dealers said state-owned banks sold the greenback, likely on behalf of the central bank, to prevent a sharp depreciation in the rupee and excessive volatility in the currency market.
The Indian unit seems to have taken little support from a sharp decline in crude oil prices due to persistent dollar purchases from oil marketing companies and other importers, dealers said.
Crude oil prices fell by around 5% on Thursday. The US Energy Information Administration said US crude oil stocks rose by 3.6 mln barrels last week to 421.9 mln barrels, way above analysts’ expectations in a Reuters poll.
At 1219 IST, the January contract of Brent Crude Oil on the Intercontinental Exchange was at $77.44 a barrel against $77.42 a bbl on Thursday. The current crude oil price is much lower than $81.18 a bbl on Wednesday.
Dealers see immediate key technical support for the rupee at 83.30 a dollar. The rupee is seen at 83.00-83.30 against the dollar during the day. (Vaishali Tyagi and Sourabh Kumar)
India Rupee – Asia FX: Most units up as 10-yr US yields, crude fall
MUMBAI – Most Asian currencies were up against the dollar today as the 10-year US Treasury yields fell on Thursday after weekly jobless claims data, which rose more than market’s expectations.
The jobless claims data pointed towards a cooling labour market, leading to expectations amongst market participants that the US Federal Reserve may opt to cut interest rates in early 2024.
Initial claims for state unemployment benefits in the US rose by 13,000 to a seasonally-adjusted 231,000 for the week ended Nov 11, data showed. Economists polled by Reuters had forecast 220,000 claims for the latest week.
At 1032 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 104.36, compared with 104.37 on Thursday. It was at 104.38 on Wednesday.
The Asian currencies were also supported by a decline in crude oil prices that fell by around 5% on Thursday. The US Energy Information Administration said US crude stocks rose by 3.6 mln barrels last week to 421.9 mln barrels, way above analysts’ expectations in a Reuters poll.
At 1032 IST, the January contract of Brent crude oil on the Intercontinental Exchange was at $77.50 a barrel against $77.42 a bbl on Thursday. The current crude price is much lower than $81.18 a bbl on Wednesday.
The South Korean won rose 0.4% against the dollar as the country’s economy indicated signs of a gradual recovery, led by improvement in exports, production and employment, amid volatile prices of raw materials and persisting external uncertainties, South Korea’s finance ministry said today.
“We’ve seen signs of a gradual economic recovery on the back of the rebound of production and exports in the manufacturing sector, and the improvement in the service field and the job market,” the Ministry of the Economy and Finance said.
The Indonesian rupiah strengthened 0.4% against the greenback.
The Philippines peso gained 0.3% against the dollar as Bangko Sentral ng Pilipinas, the central bank of Philippines, kept policy rates untouched at 6.5% in its policy meeting on Thursday after hiking by 25 basis points two weeks ago at an off-cycle meeting.
The Malaysian ringgit and the Taiwan dollar were up 0.1% against the dollar. The Thai baht was largely steady. (Vaishali Tyagi)
India Rupee: Steady as dlr flat post US econ data; fall in crude aids
MUMBAI – The rupee was largely steady against the dollar as the dollar index was broadly flat after data showed US jobless claims rose more than expected, dealers said.
The weekly jobless claims increased 13,000 to 231,000 in the week ended Nov 11, which was at a three-month high, suggesting that the labour market was gradually cooling and assisting the Federal Reserve in its fight against inflation. The rise in initial claims for state unemployment benefits in the US was 11,000 more than Reuters’ forecast of 220,000 claims for the reported week.
With such data indicating a cooling off of the economy, almost 49% of traders expect the Fed to cut rates by May next year, according to the CME Group’s FedWatch Tool.
At 0948 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was steady at 104.36, compared with 104.37 on Thursday. It was at 104.38 on Wednesday.
Meanwhile, crude oil prices plummeted almost 5% on Thursday, falling to their lowest level in four months, as US crude stockpiles rose, and China showed signs of easing oil demand from the industrial sector. This provided support to the Indian unit, dealers said.
The US Energy Information Administration said on Thursday that US crude stocks rose by 3.6 mln barrels last week to 421.9 mln barrels, way above analysts’ expectations in a Reuters poll.
At 0950 IST, the January contract of Brent Crude Oil on the Intercontinental Exchange was at $77.53 a barrel, against $77.42 a bbl on Thursday. The current crude price is much lower than $81.18 a bbl on Wednesday.
“There is some aggressive buying (of dollars) in the market since morning. Despite crude is down, due to buying (of dollars), it is holding this level,” said a dealer with a private bank.
Dealers see immediate key technical support for the rupee at 83.30 a dollar. The rupee is seen at 83.00-83.30 against the dollar during the day. (Sourabh Kumar)
India Rupee: Expected range for rupee – Nov 17
MUMBAI – Following are the expected support and resistance levels for the rupee today, as forecast by leading banks and brokerages in an Informist poll:
(Vaishali Tyagi)
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Avishek Dutta
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