Informist, Tuesday, Jan 30, 2024
By Sourabh Kumar
MUMBAI – The rupee closed steady against the dollar today after trading in a narrow range, as the volume in the foreign exchange market remained muted ahead of the US Federal Open Market Committee’s meeting outcome due early Thursday, dealers said. Today, the rupee closed at 83.1050 a dollar against Monday’s close of 83.1325 a dollar.
“The rupee was steady only. We didn’t see much movement as the market is waiting for the FOMC decision,” a dealer with a foreign bank said. “The market is expected to react to the FOMC decision, and we don’t see much movement from the Budget (of India).”
The rupee today opened at 83.1300 a dollar, and moved in a 4-paise range throughout the day. The Indian unit touched a low of 83.1425 a dollar and a high of 83.1050 a dollar. However, it mostly hovered at around 83.1200 a dollar.
The market remained dull due to a lack of major participation from traders. Neither exporters nor importers were actively present in the market, as they were all waiting for the US Fed’s decision on the rate trajectory, dealers said.
Today, the rupee came under pressure from a firm dollar, while it got some support from easing crude oil prices. Crude oil prices remained down today after they dropped more than a dollar a barrel on Monday, which provided some support for the Indian unit. Crude oil prices went down as China’s ailing property sector sparked demand worries.
This is amidst the already present supply risk from escalating geopolitical tensions in West Asia. China is the world’s largest oil importer. At 1619 IST, the March contract of Brent crude oil on the Intercontinental Exchange was at $82.46 a bbl compared with Monday’s high of $84.80 a bbl. It was $83.55 a bbl on Friday.
A firmness in the greenback weighed slightly on the rupee, ahead of the US Fed’s rate decision and US Fed Chair Jerome Powell’s speech which will indicate the stance of the US central bank, dealers said. However, the dollar index came off slightly during European trading hours.
Earlier, Powell and other policymakers had cautioned against anticipating interest rate cuts until inflation retreats to the average 2% annual target, but also vowed to remain agile as they respond to economic data. Data released last week also reinforced views that economic growth remains solid, and the Fed is unlikely to cut rates in March.
According to the CME Group’s Fedwatch Tool, markets are currently pricing in a 44.7% chance that the US central bank will begin cutting rates in March, down from 73.4% in the last week of December. At 1618 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 103.42 compared with 103.46 on Monday. It was 103.47 on Friday.
Recent data showed that annual Personal Consumption Expenditures index in the US rose 2.6% in December, the same as in November. However, consumer spending was seen increasing by 0.7% in the same month against 0.4% in the previous month. “We have also seen that there is uncertainty in the data from the US for inflation, so that is putting the market in a situation of uncertainty, as to when the Fed will start cutting rates,” Arnob Biswas, assistant vice president, FX Research at SMC Securities said.
Going forward, some movement in the rupee will be seen only after the FOMC meeting decision, dealers said. “For us the Indian budget is a non-event generally, and therefore the market is mostly looking at FOMC. If there is a hawkish remark in the FOMC meeting, the rupee may not depreciate much, as there is an inherent positive bias towards it,” Biswas said. “If the FOMC shows the Fed’s stance to be dovish, the dollar may fall, and we may see some sharp appreciation in the rupee, reaching it to 82.70 levels.”
Dealers said that since the Indian currency is driven by flows and market sentiment, future inflows may provide some support to the rupee. In September, JP Morgan announced the inclusion of Indian gilts in its Global Bond Index – Emerging Markets suite over a 10-month period starting Jun 28. This is expected to drive foreign fund inflows into the country.
Today, the rupee was also weighed by a fall in domestic indices. The BSE Sensex and Nifty 50 were down 1.1% and 1% respectively. On the domestic front, the market kept an eye out on the Interim Budget for 2024-25 (Apr-Mar). The Interim Budget will be presented by the Finance Minister, Nirmala Sitharaman, in the parliament on Feb 1.
Apart from the FOMC and the Indian Budget, market participants are also looking forward to the US Job Openings and Labor Turnover Survey for December, due later today.
FORWARDS
Premiums on the one-year dollar/rupee forward contracts rose today, tracking a fall in US treasury yields, dealers said. Premiums on forwards of a currency pair are reflective of the interest rate differential between the two countries.
Market participants see strong technical resistance for the one-year forward premium at 1.80%. The premium on the one-year, exact-period dollar/rupee forward contract was 156.29 paise, against 155 paise at Monday’s close. On an annualised basis, the premium was 1.87%, slightly up from 1.86% at Monday’s close.
OUTLOOK
On Wednesday, the rupee will take cues from movements in the dollar index and crude oil prices, while the market is expected to be dull ahead of the FOMC decision, dealers said.
During the day, the rupee is seen in a range of 82.90-83.30 a dollar, with key technical support pegged at 83.30 a dollar.
India Rupee – World FX: Euro dn 0.2% before Eurozone flash GDP data
MUMBAI – The euro weakened 0.2% against the dollar ahead of the Eurozone preliminary flash GDP estimate for Oct-Dec, due later today. Meanwhile, traders also kept an eye out for Germany’s provisional CPI numbers for January for further cues, also due today.
In European trading hours, the dollar was firm ahead of the US Federal Reserve’s Federal Open Market Committee meeting. The dollar index had gone up, clocking over a one-month-high on Monday, touching 103.82. The market will look out for Fed Chair Jerome Powell’s comments for clues on potential future cuts, particularly as expectations for March diminished.
According to the CME Group’s Fedwatch Tool, markets are currently pricing in a 44.7% chance that the US central bank will begin cutting rates in March, down from 73.4% in the last week of December. At 1356 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 103.51 compared with 103.46 on Monday. It was 103.47 on Friday.
The pound sterling slipped 0.2% against the greenback ahead of the Bank of England’s interest rate decision due Thursday. Both the Australian dollar and the Canadian dollar remained flat against the dollar.
The Japanese yen was flat against the dollar as traders digested Japan’s unemployment data. Japan’s unemployment rate fell to 2.4% in December from 2.5% the month before. Economists polled by Reuters had expected the unemployment rate to remain unchanged at 2.5%.
Apart from the US FOMC decision, market participants also await the US Job Openings and Labor Turnover Survey for December due later today. (Vaishali Tyagi)
India Rupee: Premiums steady on caution before US FOMC outcome Thu
NEW DELHI – Premiums on one-year dollar/rupee forward were largely steady today as market participants refrained from placing large bets and were cautious ahead of the outcome of the US Federal Open Market Committee’s meeting on Thursday, dealers said.
“Intraday, premiums are so far the same, because everything now depends on when rate cuts happen (in the US), everything depends on FOMC,” a dealer at a state-owned bank said. “If rate cut happens (in March), forwards will go up because paying will be there.”
Expectations of a rate cut in March have dialled down to 44.7%, from 73.4% in the last week of December, according to the CME Group’s Fedwatch Tool.
A slight fall in US Treasury yields supported the premiums, dealers said. US Treasury yields fell on Monday ahead of the US Federal Reserve’s Federal Open Market Committee’s meeting, beginning today.
Investors await the US Job Openings & Labor Turnover Survey for December, due today, which may provide insights on the state of the world’s largest economy, influencing the rate cut trajectory of the US Fed.
Market participants see strong technical support for the one-year dollar/rupee forward premium at 1.90%. At 1425 IST, the premium on the one-year, exact-period dollar/rupee forward contract was 156.27 paise, against 155.00 paise at Monday’s close. On an annualised basis, the premium was at 1.86%, unchanged against the previous close. (Kabir Sharma)
India Rupee: In thin band ahead of US FOMC decision; firm dlr weighs
MUMBAI – The rupee traded in a narrow range of 4 paise today ahead of the US Federal Open Market Committee meeting outcome due Thursday, dealers said. The volume remains muted today, ahead of the US Federal Reserve’s rate decision, similar to Monday’s dull market, they said.
“Just like yesterday, today’s market is also pretty flat. The market is expecting the FOMC to maintain the status quo, and they are expecting the Fed to delay the rate cuts now,” a dealer with a state-owned bank said.
The US dollar was firm ahead of the US Federal Reserve’s Federal Open Market Committee meeting, which weighed on the rupee. The dollar index had gone up, clocking over a one-month-high on Monday, touching 103.82. The market will look out for Fed Chair Jerome Powell’s comments for clues on potential future cuts, particularly as expectations for March diminished.
Data released last week also reinforced views that economic growth remains solid, and the Fed is unlikely to cut rates in March. At 1254 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 103.55 compared with 103.46 on Monday. It was 103.47 on Friday.
Apart from the Fed’s rate trajectory going forward, market participants are also looking forward to India’s budget announcement, where the level of capital expenditure might somewhat affect the rupee, dealers said. The rupee, after opening, has remained mostly contained in its movement, hovering at around 83.1200 a dollar, indicating muted volumes, they said.
Domestic indices fell today, which also put some pressure on the Indian unit, dealers said. At 1252 IST, the BSE Sensex and the Nifty 50 were down 0.5% and 0.2% respectively. Dealers said right now they are not expecting any inflows to aid the rupee.
Meanwhile, the Indian unit found some support from easing crude oil prices. Oil prices dropped more than a dollar a barrel on Monday as China’s ailing property sector sparked demand worries, causing traders to reassess the supply risk from escalating geopolitical tensions in West Asia. At 1254 IST, the March contract of Brent crude oil on the Intercontinental Exchange was at $82.50 a bbl compared with Monday’s high of $84.80 a bbl. It was $83.55 a bbl on Friday.
Apart from the US FOMC decision, market participants also await the US Job Openings and Labor Turnover Survey for December due later today. They also await Eurozone Manufacturing PMI and UK S&P Global Manufacturing PMI along with Japan Manufacturing PMI, due Thursday.
For the rest of the day, the rupee is seen in a range of 82.90-83.30 against the dollar, dealers said. They pegged the key technical support for the Indian currency at 83.30 a dollar. (Sourabh Kumar)
India Rupee – Asia FX:Dn post Japan unemployment data; FOMC meet eyed
MUMBAI – Most Asian currencies were down against the dollar today as investors assessed Japan’s unemployment data. Japan’s unemployment rate fell to 2.4% in December from 2.5% the month before. Economists polled by Reuters had expected the unemployment rate to remain unchanged at 2.5%.
Meanwhile, the dollar was firm ahead of the US Federal Open Market Committee’s meeting, which weighed on Asian units. Investors are also eager for insights from the US Job Openings and Labour Turnover Survey for December, which could impact the rate cut trajectory of the Federal Reserve.
According to the CME Group’s Fedwatch Tool, markets are currently pricing in a 44.7% chance that the US central bank will begin cutting rates in March, down from 73.4% in the last week of December. At 0920 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 103.46, unchanged from Monday. It was 103.47 on Friday.
The Thai baht fell 0.3% against the US unit. On Monday, Deputy Finance Minister Julapun Amornvivat said Thailand’s economy is in a state of recession due to a high level of household debt, reiterating the need for stimulus to jump-start the economy. The minister said the government was committed to delivering on its signature 500-bln-baht, or $14.05-bln, handout plan of transferring 10,000 baht to 50 mln people, and hoped a delay in its rollout would not be long.
Both the Taiwan dollar and Indonesian rupiah fell 0.2% against the dollar. The Philippines peso and Malaysian ringgit fell 0.1% each against the greenback. Investors now await China’s January factory activity data and Australia’s Oct-Dec inflation data, which will be released on Wednesday. (Vaishali Tyagi)
India Rupee: Steady as firm dlr offsets slight fall in crude prices
MUMBAI – The rupee was steady against the dollar as a surge in the dollar index offset the impact of a slight fall in crude prices, dealers said. Market participants keenly await the outcome of the US Federal Open Market Committee’s meeting, due past midnight Wednesday, for cues on the interest rate trajectory in the US, they said. Dealers said investors will also keep a close eye on Interim Budget for 2024-25 (Apr-Mar), due Thursday for further cues.
“There are two things which we are waiting for, one is FOMC and the other is the Budget. We are expecting US Fed to keep the same stance but a thing to observe is in which tenure they signal rate cut,” a dealer at a state-owned bank said. “About Budget we need to see, whether they declare capital expenditure higher or lower, which will decide the rupee’s movement.”
The US dollar was firm ahead of the US Federal Reserve’s Federal Open Market Committee meeting. Interest rates are seen remaining unchanged at 5.25-5.50%, as expected. The market will look out for Fed Chair Jerome Powell’s comments for clues on potential future cuts, particularly as expectations for March diminished.
Earlier, US Fed Chair Jerome Powell and other policymakers cautioned against anticipating interest rate cuts until inflation retreats to the average 2% annual target, but also vowed to remain agile as they respond to economic data. Data released last week also reinforced views that economic growth remains solid, and the Fed is unlikely to cut rates in March. According to the CME Group’s Fedwatch Tool, markets are currently pricing in a 44.7% chance that the US central bank will begin cutting rates in March, from 73.4% in the last week of December. At 0920 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 103.46 compared with 103.46 on Monday. It was 103.47 on Friday.
Meanwhile, the Indian unit found support from easing crude oil prices. Oil prices dropped more than a dollar a barrel on Monday as China’s ailing property sector sparked demand worries, causing traders to reassess the supply risk from escalating geopolitical tensions in West Asia.
China, the world’s largest oil importer, where a real estate crisis deepened with a Hong Kong court ordering the liquidation of the world’s most indebted property developer China Evergrande Group on Monday. China’s real estate sector faces a debt crisis that is weighing on the country’s economy, raising worries amongst traders that China’s demand for crude could dampen as a result.
At 0930 IST, the March contract of Brent crude oil on the Intercontinental Exchange was at $82.58 a bbl compared with $82.40 a bbl on Monday. It was $83.55 a bbl on Friday. Crude prices went to $84.80 a bbl on Monday.
Meanwhile, investors also digested Japan’s unemployment data released today. Japan’s unemployment rate in December fell to 2.4%, lower than 2.5% in the month before and slightly below expectation. Economists polled by Reuters expected the unemployment rate to stay unchanged at 2.5%.
Market participants await US Job Openings and Labor Turnover Survey for December, which could impact the rate cut trajectory of the US Fed. They also await Eurozone Manufacturing PMI and UK S&P Global Manufacturing PMI along with Japan Manufacturing PMI, due Thursday. All three data will be released for January.
For the rest of the day, the rupee is seen in a range of 82.90-83.30 against the dollar, dealers said. They pegged the key technical support for the Indian currency at 83.30 a dollar. (Vaishali Tyagi)
India Rupee: Expected range for rupee – Jan 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:
(Vaishali Tyagi)
End
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Vidhi Verma
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