Informist, Wednesday, Jan 10, 2024
By Sourabh Kumar
MUMBAI – The rupee ended at a near four-week high against the dollar today as foreign banks persistently sold the greenback for foreign fund inflows into domestic equities, dealers said.
“Everyone wanted to buy (dollars) in the morning, that is why the rupee held 17-18 levels (83.17-83.18 a dollar). Then inflows came and it (rupee) came to these levels,” a dealer with a private bank said.
The rupee settled at 83.0350 a dollar against Tuesday’s close of 83.1150 a dollar. It moved in a broad range of over 20 paise today.
The Indian unit had opened steady against the dollar today but fell shortly afterwards as the greenback was firm ahead of the release of the US Consumer Price Index, due Thursday, dealers said.
Traders await inflation data for further cues on when the US Federal Reserve will start cutting the Fed funds rate. Headline inflation is expected to rise 0.2% month-on-month and 3.2% on year, according to a Reuters poll.
According to the CME Group’s FedWatch Tool, Fed funds futures traders expect a 63% chance of rate cuts by the Fed at its March meeting, slightly up from Tuesday’s 60% chance.
At 1538 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 102.39 compared with 102.50 on Tuesday. It was 102.28 on Monday.
During the early trading hours, there was pressure on the rupee as importers bought the greenback, which kept it at around 83.17-83.18 level, dealers said.
A slight rise in crude oil prices in the morning weighed on the rupee, dealer said. Futures drew some support from the closure of Libya’s Sharara oilfield, which pumps out 300,000 barrels per day of oil. Further, developments in the West Asian crisis are expected to drive oil prices upward.
At 1635 IST, the March contract for Brent crude oil on the Intercontinental Exchange was at $77.60 a bbl, compared with Tuesday’s high of $78.19 a bbl, and Monday’s close of $76.12 a bbl.
In the second half of the day, foreign banks started selling dollars for foreign fund inflows into domestic equities, dealers said. Such inflows into equities led the rupee to appreciate to around 83.04-83.06 a dollar, where it sustained for a while.
The rupee, which was under the influence of dollar inflows into equities, further moved up and broke the 83 level, touching an over three-week intraday high of 82.97 a dollar. Later on, it came down from this level to settle at 83.0350 a dollar.
A lack of dollar buying by the RBI above 83 level also supported the Indian unit, dealers said. However, importers bought the greenback at levels around 82.97 a dollar, which pressured the Indian unit to fall below 83 levels, dealers said.
“Rupee broke 83.00 after RBI left the buying and allowed it to appreciate as inflows from FPIs dominated the scene with money coming in for debt and equity,” said Anil Kumar Bhansali, head of treasury and executive director, Finrex Treasury Advisors LLP. “After making a low of 83.18, rupee appreciated to 82.97 as flows continued,” Bhansali said.
Rise in domestic equities also supported the rupee. Today, the Sensex and Nifty 50 closed 0.4% and 0.3% up, respectively.
Traders now also await India’s inflation data for December, due Friday, dealers said. However, they added that the market depends more on the US than Indian data to take actions.
India’s annual inflation rate based on CPI likely rose to a four-month high of 5.9% in December from 5.6% in November, mainly because of the statistical effect of a low base, according to an Informist poll of 19 economists.
FORWARDS
The premiums on one year dollar/rupee forwards were steady today in anticipation of the release of US inflation data for December, due Thursday, dealers said.
Premiums were also steady tracking the largely unchanged US Treasury yields, dealers said. 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 153 paise, against 153.25 paise on Tuesday. On an annualised basis, the premium was 1.83%, unchanged from Tuesday.
OUTLOOK
On Thursday, the rupee will take cues from movement in the dollar index and crude oil prices, dealers said.
During the day, the rupee is seen in a range of 82.90-83.30 a dollar, with key technical resistance pegged at 82.90 a dollar.
India Rupee – World FX: Yen dn as Japan’s real wages fall; euro flat
MUMBAI – The Japanese yen weakened 0.3% against the dollar after Japan’s labour ministry today reported that the country’s inflation-adjusted real wages fell 3% on year in November. Nominal pay, however, grew a modest 0.2% during the month, the slowest in nearly two years, compared to a 1.5% rise the previous month.
The Australian dollar rose 0.2% against the greenback, even as consumer price inflation in Australia fell to a near two-year low in November and core inflation fell sharply, reinforcing market expectations that interest rates will remain at this level.
Data from the Australian Bureau of Statistics on Wednesday showed that CPI rose to 4.3% on year in November, down from 4.9% in October and below the market forecast of 4.4%.
The euro and the pound sterling remained flat against the greenback. In the Eurozone, data released by the German Federal Statistical Office on Tuesday showed industrial production in November unexpectedly fell 0.7% on month. A Reuters poll showed that respondents had expected a 0.2% rise. This was the sixth monthly decline in a row.
The Canadian dollar rose 0.1% against the greenback, while the Swiss franc fell 0.1% against.
The greenback remained firm ahead of US inflation data for December, due on Thursday, as traders are closely monitoring inflation data for cues on when the US Federal Reserve will start cutting the Fed funds rate. According to a Reuters poll, it is expected that headline inflation will stand at 0.2% on month and 3.2% on year.
At 1423 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 102.51 compared with 102.50 on Tuesday. It was 102.28 on Monday. (Vaishali Tyagi)
India Rupee: Steady as firm dlr offsets bks’ dlr sales before fixing
MUMBAI – The rupee was steady against the dollar as banks’ dollar sales ahead of reference rate fixing offset the effect of a firm dollar index, dealers said. The greenback remained firm ahead of the upcoming US inflation data for December, due Thursday, they said.
Traders also refrained from taking any big bets ahead of India’s December CPI data, due Friday, they said. They added that the market depends more on the US data than Indian figures to take actions.
“As such there is not much movement in the market today, early morning there was a lot of buying from regular importers which took it (rupee) 4 paise down,” a dealer at a big state-owned bank said. “Traders are eyeing upon US CPI data which will come tomorrow and are avoiding any big bets ahead of US data if it brings any surprise then it will be a thing to see,” he said.
The dollar index remained firm today, after rising on Tuesday in anticipation of Thursday’s release of US inflation figures, which exerted pressure on the Indian unit, dealers said.
“As of now, there is fixing related selling but after that we are expecting it to go down till 20 (83.20) level,” a dealer with another state-owned bank.
Traders are closely monitoring the inflation data for further cues on when the US Federal Reserve will start cutting the Fed funds rate. According to a Reuters poll, it is expected that headline inflation will see a rise of a 0.2% month-on-month and a 3.2% year-on-year.
At 1311 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 102.56 compared with 102.50 on Tuesday. It was 102.28 on Monday.
Crude oil prices have also risen marginally, which weighed on the rupee, dealer said. Futures drew some support from the closure of Libya’s Sharara oilfield, which pumps out 300,000 barrels per day of oil. Further, developments in the West Asian crisis could still drive oil prices upward.
At 1311 IST, the March contract for Brent crude oil on the Intercontinental Exchange was at $77.93 a bbl, compared with Tuesday’s high of $78.19 a bbl, and Monday’s close of $76.12 a bbl.
A slight fall in domestic indices also weighed on the Indian unit. At 1311 IST, the Sensex and Nifty 50 were 0.1% down.
For the rest of the day, the rupee is seen in a range of 82.90-83.30 against the dollar, with dealers pegging key technical resistance for the rupee at 83.00 a dollar. (Vaishali Tyagi)
India Rupee – Asia FX: Most units dn on firm dlr ahead of US CPI data
Most Asian currencies were down against the dollar as the dollar index remained firm ahead of the release of the US consumer price index, due Thursday.
After rising on Tuesday, the dollar index was firm today ahead of the US inflation figures, due Thursday. Traders await the data for further cues on when the Federal Reserve is likely to start cutting the fed funds rate. The data is expected to show headline inflation rising 0.2% month-on-month in December and 3.2% on year, as per Reuters.
Moreover, the US trade deficit narrowed in November on account of a fall in imports of consumer goods to a one-year low as domestic demand eased, according to the Commerce Department. The trade deficit contracted 2.0% to $63.2 bln, the department’s Census Bureau said. In a Reuters poll of economists, the trade deficit was forecast to rise to $65 bln in November. Data on Tuesday also showed that exports declined in November as overseas demand cooled off.
At 1059 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 102.52 compared with 102.50 on Tuesday. It was 102.28 on Monday.
The Taiwan dollar fell 0.3% against the greenback. The currency fell even after positive economic data from the country. In December, the island nation’s exports rose more than expected at 11.8% on year. A Reuters poll had forecast a 4.9% rise in the previous month.
The South Korean won fell 0.3% against the dollar as the country’s unemployment rate spiked to a near two-year high to 3.3% in December, data released by Statistics Korea showed today.
The Philippines peso and Indonesian rupiah fell 0.6% and 0.3%, respectively, against the US unit.
The Malaysian ringgit was down 0.1% against the dollar. (Sourabh Kumar)
India Rupee: Tad down on firm dollar ahead of US CPI data; crude up
MUMBAI – The rupee was a tad down against the dollar as the dollar index remained firm ahead of the release of the US inflation data for December, due Thursday, dealers said. “Overall, I think the sentiment is in favour of the dollar. Also, the market is waiting for multiple US data this week. I expect the rupee to go to about 18-19 levels (83.18-83.19 a dollar),” a dealer at a state-owned bank said.
The dollar index was firm today, after it rose on Tuesday ahead of US inflation figures, due Thursday, which is expected to weigh on the rupee, dealers said.
Traders have kept an eye on the US inflation data for further cues on when the US Federal Reserve will start cutting the Fed funds rate. It is expected that headline inflation will rise 0.2% month-on-month and will see a rise of 3.2% on-year, according to Reuters.
According to the CME Group’s FedWatch Tool, Fed funds futures traders expect a 65% chance of rate cuts by the Fed at its March meeting, up from Tuesday’s 60% chance.
At 0929 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 102.56 compared with 102.50 on Tuesday. It was 102.28 on Monday.
Traders will also look at the inflation for India in December, due Friday, dealers said. They added that the market depends more on the US data than Indian figures to take actions.
Crude oil prices have also risen slightly, which weighed on the rupee, dealer said. Futures drew some support from the closure of Libya’s Sharara oilfield, which pumps out 300,000 barrels per day of oil. Further, developments in the West Asian crisis could still drive oil prices upward.
At 0943 IST, the March contract for Brent crude oil on the Intercontinental Exchange was at $77.83 a bbl, compared with Tuesday’s high of $78.19 a bbl, and Monday’s close of $76.12 a bbl.
For the rest of the day, the rupee is seen in a range of 82.90-83.30 against the dollar, with dealers pegging key technical resistance for the rupee at 83.00 a dollar. (Sourabh Kumar)
India Rupee: Expected range for rupee – Jan 10
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 Vandana Hingorani
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