Informist, Thursday, Nov 30, 2023
By Vaishali Tyagi and Sourabh Kumar
MUMBAI – The rupee ended at a record closing low against the dollar today as the greenback recovered sharply in European trade following the release of US GDP data on Wednesday, dealers said. Banks also bought dollars for foreign fund outflows from domestic equities, they said.
State-owned banks sold dollars on behalf of the Reserve Bank of India at around the 83.39-rupees-a-dollar level but could not prevent the Indian unit from closing at a new low.
“If they (the RBI) allow the rupee to be free, the volatility that gets generated will lead to panic-selling,” a dealer at a state-owned bank said. “They are just trying to curb volatility.”
After moving in a narrow range of 11 paise throughout the day, the rupee settled at 83.3950 a dollar today, against Wednesday’s close of 83.3250 a dollar.
The rupee opened steady against the dollar as foreign banks’ dollar sales, likely for foreign fund inflows related to rebalancing of the MSCI Emerging Markets Index, offset the impact of a rebound in the dollar index after the US GDP data.
On Nov 14, MSCI raised India’s weightage in its Global Standard (Emerging Markets) index to 16.3% from 15.9%. Indian equities are expected to receive passive inflows of around $1.5 bln after the rejig, adjustments for which will take place today, according to a report by Nuvama Wealth Management.
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MSCI added several Indian stocks, such as automaker Tata Motors, cables maker Polycab India, real-estate firm Macrotech Developers, IndusInd Bank, and Paytm-parent One 97 Communications, to the index.
Dealers said shares of newly listed companies have gained, but the current trend is to sell for profit with foreign investors cashing out. While some investment is coming in, it is not substantial compared to the money going out, which led the rupee to depreciate further.
As the day went by, a few state-owned banks sold dollars to try and save the rupee from depreciating sharply as the dollar strengthened in the early hours of European trade. The dollar index rose after US GDP numbers for Jul-Sep showed the world’s largest economy grew faster than previously estimated.
The US GDP grew 5.2% on year in the reporting quarter, up from the previously estimated 4.9%, the Commerce Department’s Bureau of Economic Analysis said on Wednesday in its second GDP estimate. This is the fastest pace of expansion of the country’s GDP in nearly two years. In Apr-Jun, the US economy grew 2.1%.
The GDP figure for Jul-Sep was also higher than the estimate of 5.0% growth in a Reuters poll of economists. However, the US economy grew at a moderate pace when measured from the income side.
Despite the positive outlook on the US economy, market participants are waiting to see whether Federal Reserve Chair Jerome Powell will, on Friday, reaffirm comments made by Fed Governor Christopher Waller on Tuesday, where he indicated a possible rate cut in coming months. The US Core Personal Consumption Expenditure Price Index, the Fed’s preferred measure of inflation, is due later today.
At 1625 IST, the dollar index was at 103.25, up from the three-month low of 102.47 it hit on Wednesday. The index, which measures the strength of the greenback against a basket of six major currencies, settled at 102.82 on Wednesday. It was at 102.72 on Tuesday.
Crude oil prices rose ahead of the meeting of the Organization of the Petroleum Exporting Countries and its allies later today to discuss the extension or deepening of supply cuts. OPEC and its allies are mulling production cuts of as much as 1 mln bbl a day, The Wall Street Journal reported on Wednesday.
At 1627 IST, the price for the January contract of Brent crude oil on the Intercontinental Exchange was $84.46 a bbl, compared to $83.10 a bbl on Wednesday. It was $81.68 a bbl on Tuesday.
FORWARDS
Premiums on one-year dollar/rupee forwards rose today owing to a fall in US Treasury yields, dealers said. On Wednesday, the forwards had touched a 15-year low.
Yields fell despite data showing US GDP grew at a 5.2% annualised rate in the September quarter, faster than the previously reported 4.9%.
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 128.02 paise, against 125.11 paise on Wednesday. On an annualised basis, the premium was at 1.53%, against the previous close of 1.49%.
OUTLOOK
On Friday, the rupee will take cues from movement in the dollar index and crude oil prices, dealers said. They expect the RBI to continue selling dollars to prevent runaway depreciation in the rupee.
Dealers have pegged key technical support for the local currency at 83.50 a dollar. During the day, the rupee is seen in the range of 83.10-83.50 a dollar.
India Rupee – World FX: Euro falls on weak German economic data
MUMBAI – The euro weakened 0.4% against the dollar after inflation in Germany eased in November as energy prices declined. Data from the Federal Statistics Office showed that the country’s inflation rate had fallen to its lowest level since June 2021.
Additionally, the unemployment rate in Germany came in higher, suggesting a slowdown in the economy. The Federal Labour Office said the number of jobless people rose by 22,000 to 2.702 mln. The seasonally adjusted jobless rate rose to 5.9% from 5.8% in October.
Eurozone inflation is also expected to ease to 2.7% in November from 2.9% in October, according to economists polled by Reuters.
The Australian dollar was largely steady against the US currency unit. Data from the Australian Bureau of Statistics showed a 0.6% rise on quarter in private capital expenditure in Jul-Sep, led by a 5.6% increase in spending in the mining sector.
The pound sterling was down 0.3% against the dollar as the dollar index rebounded after US GDP numbers for Jul-Sep showed that the world’s largest economy grew faster than estimated.
The US GDP grew 5.2% on year in the reporting quarter, up from the previously estimated 4.9%, the Commerce Department’s Bureau of Economic Analysis said on Wednesday in its second GDP estimate. This is the fastest pace of expansion of the country’s GDP in nearly two years.
In Apr-Jun, the US economy grew 2.1%. The GDP figure was also higher than the estimate of 5.0% growth in a Reuters poll of economists.
The Canadian dollar was down 0.1% against the greenback. (Sourabh Kumar)
India Rupee: Premiums up after touching 15-yr low on Wed as US yields fall
MUMBAI – Premiums on one-year dollar/rupee forwards rose today after touching a 15-year low on Wednesday due to a fall in US Treasury yields, dealers said.
US Treasury yields were lower, with the benchmark 10-year paper falling for a third straight session on Wednesday and trading below the 4.30% yield for the first time since September. The latest economic data failed to nudge the market expectation that a Fed rate cut could be on the horizon.
Yields fell despite data showing US GDP increased at a 5.2% annualised rate in the September quarter, faster than the previously reported 4.9%. It was the fastest expansion since the fourth quarter of 2021, the US Commerce Department said in its second estimate.
Cleveland Fed President Loretta Mester reiterated on Wednesday that the central bank needs to remain “nimble” in its response to economic data.
“While it is still above our 2% goal, there has been discernible progress on inflation even while the overall economy has remained relatively strong,” Mester said in a speech prepared for delivery before a conference on financial issues in Chicago.
On Wednesday, the US Fed’s Bank of Atlanta President Raphael Bostic said he expects growth in the country to slow and inflation to continue to ease on the back of tight monetary policy.
However, banks continuously sold dollars on behalf of exporters for forward delivery, which limited gains for the premiums, dealers said.
“There is heavy receiving today, mainly from exporters as month-end demand is there,” a dealer at a foreign bank said.
At 1432 IST, the premium on the one-year, exact-period dollar/rupee forward contract was at 128.50 paise, against 125.11 paise on Wednesday. On an annualised basis, the premium was at 1.54%, against the previous close of 1.49%. (Kabir Sharma)
India Rupee: Tad dn as banks buy dlrs for FII outflows, dlr rebounds
MUMBAI – The rupee was marginally down as banks bought dollars for foreign fund outflows, which offset sale of dollars by foreign banks, likely for foreign fund inflows associated with rebalancing of the MSCI Emerging Markets Index, dealers said.
“After listing gains (in shares of companies after their initial public offerings), dollar is repatriating; FIIs (foreign institutional investors) are booking profit,” a dealer at a state-owned bank said. “MSCI inflow will be there but that is not huge as outflows against it are more,” he said.
On Nov 14, MSCI had raised India’s weightage in its Global Standard (Emerging Markets) index to 16.3% from 15.9%. Indian equities are expected to receive passive inflow of around $1.5 bln after the rejig, adjustments for which will take place today, according to a report by Nuvama Wealth Management.
MSCI added several Indian stocks, such as automaker Tata Motors, cables maker Polycab India, real estate firm Macrotech Developers, IndusInd Bank and Paytm-parent One 97 Communications, to the index.
The rupee was also weighed down by a rebound in the dollar index following the release of US GDP data, dealers said.
The dollar index made a slight recovery from the over-three-month low it touched on Wednesday after data showed the US economy grew faster in Jul-Sep than initially indicated. The second estimate showed the country’s GDP rose 5.2% on year in Jul-Sep, revised upward from 4.9% reported previously. This was the fastest pace of expansion in nearly two years. In Apr-Jun, the economy grew at 2.1%.
At 1315 IST, the dollar index was at 102.80, up from an over-three-month low of 102.47 touched on Wednesday. The index, which measures the strength of the greenback against a basket of six major currencies, settled at 102.82 on Wednesday. It was at 102.72 on Tuesday.
Rise in crude oil prices also weighed on the rupee. The January contract of Brent crude was at $83.33 a barrel at 1315 IST. It was at $83.10 a bbl on Wednesday, and $81.68 a bbl on Tuesday.
A fall in domestic shares indices also exerted pressure on the Indian currency. At 1315 IST, the Sensex and Nifty 50 were down 0.3% and 0.2%, respectively.
For the rest of the day, the rupee is seen in a range of 83.10-83.40 against the dollar, with immediate key technical support pegged at 83.50 a dollar. (Vaishali Tyagi)
India Rupee: Steady as MSCI-related FX inflows offset rebound in dlr
MUMBAI – The rupee was steady against the dollar as foreign banks’ dollar sales, likely for foreign fund inflows related to rebalancing of the MSCI Emerging Markets Index, offset the impact of a rebound in the dollar index post the US GDP data, dealers said.
MSCI had, on Nov 14, raised India’s weightage in its Global Standard (Emerging Markets) index to 16.3% from 15.9%. Indian equities are expected to receive passive inflow of around $1.5 bln after the rejig, the adjustments of which will take place today, according to Nuvama Wealth Management Ltd’s report.
“Yes there must be some inflows for that (MSCI index), it is quite possible. As for the morning, today also selling (of dollars) was there,” said a dealer with a private bank.
Additions to the index include stocks of companies such as Tata Motors, IndusInd Bank, and seven others. The inclusions will bring India’s total number of stocks in the index to 131, reports said.
Meanwhile, the dollar index recovered slightly from the over-three-month low it touched on Wednesday after data showed that the US economy grew faster in Jul-Sep than initially indicated.
In the US, the GDP for Jul-Sep increased by 5.2% on year in the reporting quarter, an upward revision from the previously reported 4.9% rise, the Commerce Department’s Bureau of Economic Analysis said on Wednesday in its second estimate of GDP. It was the fastest pace of expansion in nearly two years. During Apr-Jun, the economy grew at 2.1%.
The GDP figures were also up from a Reuters’ poll of economists, who expected the growth to be 5.0%. However, the US economy grew at a moderate pace when measured from the income side.
Market participants are now waiting to see whether the US Federal Chair Jerome Powell will reaffirm comments made by the Fed Governor Christopher Waller on Tuesday, where he indicated a possible rate cut in the coming months. Powell is expected to give a speech on Friday.
Around 49% of traders now expect the first rate-cut in the world’s largest economy by March, as against around 25% of traders in the previous week, according to the CME Group’s FedWatch Tool.
At 0948 IST, the dollar index was at 102.80, from an over-three-month low of 102.47 it touched on Wednesday. The index, which measures the strength of the greenback against a basket of six major currencies, settled at 102.82 on Wednesday. It was at 102.72 on Tuesday.
Market participants also await the US core Personal Consumption Expenditures Price Index–the Fed’s preferred measure of inflation–due later today.
Dealers see immediate key technical support for the rupee at 83.50 a dollar. The rupee is seen at 83.10-83.40 against the dollar during the day. (Sourabh Kumar)
India Rupee – Asia FX: Most dn as dlr index rebounds post US GDP data
NEW DELHI – Most Asian currencies fell against the dollar today as the dollar index recovered slightly from the over three-month low it touched on Wednesday after data showed that the US economy grew faster in Jul-Sep than initially indicated.
US GDP growth increased at a 5.2% annualised rate in Jul-Sep, the US Commerce Department said in its second estimate of Jul-Sep GDP. The acceleration topped the initial 4.9% reading and was better than the 5% forecast from economists polled by Dow Jones.
The dollar index fell to an over three-month low on Wednesday after US Federal Reserve Governor Christopher Waller, who is generally considered very hawkish, said there is no reason to keep rates high, spurring expectations of a rate cut.
At 0840 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 102.77. It was 102.83 on Wednesday, and 102.72 on Tuesday. The index had fallen to an over three-month low of 102.47 on Wednesday.
The Indonesian rupiah fell 0.5%, the most among its peers, after Bank Indonesia Governor Perry Warjiyo said on Wednesday that the central bank will maintain its benchmark rate at the current level into 2024 barring any major changes in global dynamics, indicating that the central bank is done with its rate hike cycle.
The Thai baht fell 0.2% against the US unit. Thailand’s central bank kept its key interest rate steady on Wednesday, on expected lines, saying the current level was suitable to support the country’s economic recovery, while cutting its growth outlook.
The Taiwan dollar and the Philippine peso fell 0.1% and 0.2% against the dollar, respectively. Meanwhile, South Korean won was flat.
Market participants now await the US core personal consumption expenditures price index–the Fed’s preferred measure of inflation–due later today, for further cues on the US central bank’s monetary policy path. They also await a speech by Fed Chair Jerome Powell, scheduled on Friday. (Pratiksha)
India Rupee: Expected range for rupee – Nov 30
MUMBAI – Following are the expected support and resistance levels for the rupee today, as forecast by leading banks and brokerages in an Informist poll:
(Sourabh Kumar)
End
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Rajeev Pai
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