Informist, Wednesday, Dec 6, 2023
By Sourabh Kumar and Kabir Sharma
MUMBAI – The rupee ended slightly higher against the dollar today as a few foreign banks, including a UK-based bank, sold dollars for inflows into the domestic equity market, said dealers.
“There was a probability of inflows for Adani companies, so maybe the selling (dollars) in the morning was for that,” said a dealer with a state-owned bank. “Also, after elections we were expecting some inflows, so they might have started coming now.”
According to exchanges, shares of companies belonging to the Adani Group have risen in the range of 22% to 39% this week.
The rupee settled at 83.3250 a dollar today as compared to Tuesday’s close of 83.3825 a dollar.
The rupee, today, touched a high of 83.2900 and a low of 83.3775 a dollar compared to Tuesday, where the Indian unit moved barely 4 paise against the greenback.
The Indian currency opened steady against the dollar as the impact of a fall in crude oil prices was offset by a firm dollar index, dealers said.
The dollar index remained near an over two-week high despite data showing a cooling of the labour market in the US.
The Labor Department’s monthly Job Openings and Labor Turnover Survey, or JOLTS, report showed that new job openings, a measure of labour demand, dropped in October to the lowest level since early 2021. It fell by 617,000 to 8.733 mln in October.
This bolstered investors’ expectations that the US Federal Reserve is done hiking policy rates and will begin to cut rates as soon as March. Expectations for a rate cut of at least 25 basis points in March are about 64%, according to the CME’s FedWatch Tool, up from about 35% a week ago.
A higher-than-expected US services purchasing managers index, supported the dollar.
Economic activity in the US services sector expanded in November for the 11th consecutive month. The ISM Services PMI stood at 52.7, up from 51.8 in October and above market expectations of 52.0.
At 1558 IST, the dollar index was at 103.98. The index, which measures the strength of the greenback against a basket of six major currencies, settled at 103.97 on Tuesday. It was at 103.64 on Monday.
Dealers said some banks bought the greenback on behalf of importers and oil marketing companies, citing low prices of the commodity.
Crude oil futures fell to a near five-month low on Tuesday because of a strong dollar and fears of easing demand. The decline was also due to doubts over the Organization of the Petroleum Exporting Countries and allies announcing voluntary supply cuts last week.
On Nov 30, OPEC and allies agreed on output cuts of about 2.2 mln barrels per day for the first quarter of 2024. But at least 1.3 mln bpd of those cuts were an extension of voluntary curbs Saudi Arabia and Russia already had in place.
At 1538 IST, the February contract of Brent crude oil was at $76.68 a bbl, compared with $77.20 a bbl on Tuesday. It was at $78.14 a bbl on Monday.
However, foreign banks persistently sold the greenback for foreign fund inflows into domestic equities, which prevented the rupee from falling below the day’s low of 83.3775 a dollar.
Indian equity markets have received a total inflow of $1.35 bln dollars in December so far, as of Monday, according to data on the National Securities Depository Ltd website.
A rise in domestic equities supported the rupee. Today, the Sensex 30 and Nifty 50 ended up 0.5% and 0.4%, respectively.
Market participants now await the release of US ADP national employment report, due later today.
FORWARDS
Premiums on one-year dollar/rupee forwards rose today due to a fall in US Treasury yields on Tuesday, dealers said. US Treasury yields fell as data on fresh job openings for October showed signs that the US labour market was cooling.
Premiums on forwards of a currency pair are reflective of the interest rate differential between the two countries. Premiums also rose as gains in the rupee prompted banks and importers to buy dollars for forward delivery, dealers said.
Today, the premium on the one-year, exact-period dollar/rupee forward contract was at 135.81 paise, against 133.31 paise on Tuesday. On an annualised basis, the premium was at 1.62%, against the previous close of 1.59%.
OUTLOOK
On Thursday, the rupee will take cues from movement in the dollar index and crude oil prices, dealers said.
Dealers expect the RBI to continue selling dollars to prevent runaway depreciation in the rupee.
Investors now await the US employment report for November due on Friday.
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 econ data; dlr firm
MUMBAI – The euro was down 0.1% against the dollar as data showed Germany’s factory orders unexpectedly declined in October. On a monthly basis, contracts for goods ‘Made in Germany’ dropped 3.7%, compared to a 0.2% increase reported in September, missing the projections of a 0% reading.
Germany’s industrial orders plunged at an annual rate of 7.3% in the reported month, as against the previous fall of 4.3%.
The Canadian dollar rose 0.1% against the greenback ahead of the country’s policy meet later today. The Bank of Canada is widely expected to leave its policy rate unchanged at 5% for the third consecutive time when it concludes the December policy meeting later today.
The yen was largely unchanged against the dollar after Bank of Japan Deputy Governor Ryozo Himino said an exit from ultra-loose monetary policy, if done properly, will reap benefits for the economy, signalling that an end to decades of super-low interest rates may be nearing.
The dollar index remained firm despite data showing an easing of the labour market in the US. Job openings fell to more than a two-and-a-half-year low in October, the strongest sign yet that higher interest rates were dampening demand for workers.
At 1529 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 103.98, as against 103.97 on Tuesday. It was at 103.64 on Monday.
Fed fund futures traders have priced in 99.7% chance of the Federal Reserve standing pat next week, but a 56% chance of the central bank cutting rates in March, according to CME’s FedWatch tool. (Kabir Sharma)
India Rupee: Premiums rise as US yields fall, importers buy fwd dlrs
MUMBAI – Premiums on one-year dollar/rupee forwards rose today due to a fall in US Treasury yields on Tuesday, dealers said. US Treasury yields fell as data on fresh job openings for October showed signs that the US labour market was cooling.
The US Labor Department’s monthly Job Openings and Labor Turnover Survey, or JOLTS report, showed that new job openings, a measure of labour demand, dropped in October to the lowest level since early 2021. They fell by 617,000 to 8.733 mln as on the last day of October. This cemented expectations that the US Federal Reserve is done hiking policy rates, and will begin to cut rates as soon as March. Expectations of a US rate cut of at least 25 basis points in March are about 55%, according to CME’s FedWatch Tool, up from about 35% a week ago.
Premiums on forwards of a currency pair are reflective of the interest rate differential between the two countries.
Premiums also rose as gains in the rupee prompted banks and importers to buy dollars for forward delivery, dealers said. The Indian currency rose against the dollar today as foreign banks sold the greenback for foreign fund inflows into domestic equities, dealers said.
“The spot rupee has moved a bit today due to inflows, so importers will obviously try to make the most of it. We are seeing the same action in forwards since morning,” said a dealer with a state-owned bank.
Market participants see strong technical support for the one-year forward premium at 1.50%.
At 1315 IST, the premium on the one-year, exact-period dollar/rupee forward contract was at 135.31 paise, against 133.31 paise on Tuesday. On an annualised basis, the premium was at 1.62%, against the previous close of 1.59%.
Meanwhile, some dealers said that the Reserve Bank of India likely conducted a buy/sell swap in the one-month dollar/rupee forwards on Tuesday, in order to neutralise the impact of its dollar sale interventions in the domestic spot market.
At 1315 IST, the premium on the one-month dollar/rupee contract was 5.27 paise, flat against Tuesday. On an annualised basis, the premium was at 0.75%, against the previous close of 0.72%. (Pratiksha)
India Rupee: Up on foreign banks’ dollar sales for FX inflows
MUMBAI – The rupee was up against the dollar as foreign banks, including a UK-based bank, sold dollars for inflows into domestic equities, said dealers. Banks also bought dollars for importers, which put pressure on the rupee, they said.
“There is buying (dollars) only. Foreign banks are buying (dollars) for importers. We did see some fixing related selling, so that’s why the rupee is at these levels,” said a dealer with a state-owned bank.
A rise in domestic equities also supported the rupee. Dealers said foreign banks sold dollars for foreign fund inflows in the equity market. At 1321 IST, the Sensex 30 and Nifty 50 were up 0.2% and 0.1%, respectively.
A fall in crude oil prices also supported the Indian unit. Crude oil futures fell to a near five-month low on Tuesday because of a strong dollar and fears of easing demand. The decline was also due to doubts over the Organization of the Petroleum Exporting Countries and allies announcing voluntary supply cuts last week.
At 1321 IST, the February contract of Brent crude oil was at $77.33 a bbl, compared with $77.20 a bbl on Tuesday. It was at $78.14 a bbl on Monday.
A rise in the dollar index weighed on the rupee, which rose to near an over two-week high. It seems the dollar has taken more cues from the US services purchasing managers index than the jobs data.
The Labor Department’s monthly Job Openings and Labor Turnover Survey, or JOLTS report showed that new job openings, a measure of labour demand, dropped in October to the lowest level since early 2021.
A higher-than-expected US services purchasing managers index supported the dollar. Economic activity in the US services sector expanded in November for the 11th consecutive month.
At 1322 IST, the dollar index was at 104.00. The index, which measures the strength of the greenback against a basket of six major currencies, settled at 103.97 on Tuesday. It was at 103.64 on Monday.
For the rest of the day, the rupee is seen in a range of 83.10-83.50 against the dollar, with immediate key technical support pegged at 83.50 a dollar. (Sourabh Kumar)
India Rupee – Asia FX: Mixed as traders assess US economic data
MUMBAI – Asian currencies moved on a mixed note today as market participants assessed the US economic data released on Tuesday that showed a cooling labour market. The market now awaits release of November US jobs report, due Friday.
Data showed US job openings fell to more than a two-and-a-half-year low in October, the strongest sign yet that higher interest rates were dampening demand for workers.
Market participants have now turned their attention to the November jobs report, due Friday, which will give more cues on the strength of the US economy ahead of the Fed’s policy meeting next week. The Fed’s next policy meeting is on Dec 12-13.
Fed fund futures traders have priced in 99.7% chance of the Fed standing pat next week, but a 56% chance of the central bank cutting rates in March, according to CME’s FedWatch tool.
At 0948 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 103.93, as against 103.97 on Tuesday. It was at 103.64 on Monday.
Meanwhile, the offshore Chinese yuan was trading 0.2% lower against the dollar after Moody’s on Tuesday downgraded the outlook for China’s credit rating to ‘negative’ from ‘stable’. Major state-owned banks stepped in to stem any slide in the Chinese currency by selling dollars, as per reports.
The South Korean won and the Malaysian ringgit were down 0.1% and 0.2% against the dollar, respectively, while the Thai baht was up 0.3% against the greenback. Both the Phillipine peso and Indonesian rupiah were flat against the US unit. (Pratiksha)
India Rupee: Steady as firm dlr offsets impact of fall in oil prices
MUMBAI – The rupee was steady against the dollar as the impact of a fall in crude oil prices was offset by a firm dollar index, dealers said.
The dollar index remained near an over two-week high despite data showing a cooling of the labour market in the US.
The Labor Department’s monthly Job Openings and Labor Turnover Survey, or JOLTS, report showed that new job openings, a measure of labour demand, dropped in October to the lowest level since early 2021. It fell by 617,000 to 8.733 mln on the last day of October.
This bolstered investors’ expectations that the US Federal Reserve is done hiking policy rates and will begin to cut rates as soon as March. Expectations for a US rate cut of at least 25 basis points in March are about 64%, according to the CME’s FedWatch Tool, up from about 35% a week ago.
A higher-than-expected US services purchasing managers index, supported the dollar.
Economic activity in the US services sector expanded in November for the 11th consecutive month. The ISM Services PMI stood at 52.7, up from 51.8 in October and above market expectations of 52.0.
At 0813 IST, the dollar index was at 103.97. The index, which measures the strength of the greenback against a basket of six major currencies, settled at 103.97 on Tuesday. It was at 103.64 on Monday.
However, the rupee was supported by a fall in crude oil prices, dealers said. At 0945 IST, the February contract of Brent crude oil was at $77.25 a bbl, compared with $77.20 a bbl on Tuesday. It was at $78.14 a bbl on Monday.
Crude oil futures fell to a near five-month low on Tuesday because of a strong dollar and fears of waning demand, pulling the market down for the fourth day in a row. The decline was due to doubts over the Organization of the Petroleum Exporting Countries and allies announcing voluntary supply cuts last week.
Market participants now await the release of US national employment report, due later today.
For the rest of the day, the rupee is seen in a range of 83.10-83.50 against the dollar, with immediate key technical support pegged at 83.50 a dollar. (Kabir Sharma)
India Rupee: Expected range for rupee – Dec 6
MUMBAI – Following are the expected support and resistance levels for the rupee today, as forecast 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 Maheswaran Parameswaran
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
