Informist, Wednesday, Jan 31, 2024
By Sourabh Kumar
MUMBAI – The rupee ended a tad higher against the dollar today as a few foreign banks sold dollars for foreign fund inflows into the domestic equities and debt market, dealers said. The Indian unit rose despite the dollar remaining firm ahead of the US Federal Open Market Committee meeting outcome early Thursday, they said.
“Overall, there was selling pressure (selling dollars) in the market,” a dealer with a state-owned bank said. “Though we saw some outflows on account of oil buying (demand for dollars), dollar sales overpowered the dollar buys,” he said.
The rupee also found some support from dollar sales by a few banks on behalf of exporters. The rupee broke the narrow range of 10 paise after a week today and ended at 83.0425 a dollar. On Tuesday, the Indian unit had closed at 83.1050 a dollar. Today, the market was also upbeat ahead of the Interim Budget for 2024-25 (Apr-Mar) on Thursday, dealers said.
The rupee opened today at 83.1075 a dollar, and was steady–trading at about the same level–for an hour. However, after about 1045 IST, the rupee rose against the dollar as foreign banks sold the greenback. The domestic equities market was also up today, which supported the Indian currency. The Sensex and Nifty 50 both ended nearly 1% higher today.
Market participants have kept an eye on the Budget, where they expect the government to announce an increase in capital expenditure, dealers said. They said there might be a rise in expenditure in the green energy sector, looking at the recent push by the government for a carbon-efficient economy.
The volume in the foreign exchange market was low today, ahead of the Fed meet outcome, dealers said. Volumes in other crosses such as pound/rupee and euro/rupee rose due to lacklustre volume in dollar/rupee.
Crosses other than the dollar/rupee are proving more favourable to the traders amidst low volatility in the dollar/rupee market. “Market participants know that the RBI won’t allow volatility (in the dollar/rupee market) because of the upcoming elections,” a dealer with another state-owned bank said. “And since there is no volume in the market, traders who make the bulk of the volume never enters the market,” he said. India is scheduled to hold the General Election this year.
Dealers expect to see further movement in the rupee after the US FOMC decision. Investors also await Fed Chair Jerome Powell’s speech to get a sense of when the central bank may begin rate cuts this year, dealers said.
The rupee’s gains were capped due to a firm dollar after investors assessed the US job Openings and Labor Turnover Survey. The data for November was also revised higher. It suggests that the country’s labour market remains strong. Job openings were up 101,000 to 9.02 mln in December, data released on Tuesday by the labor department showed. At 1612 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 103.57 compared with 103.41 on Tuesday. It was 103.46 on Monday.
Crude oil prices eased, anticipating a fall in demand, after China’s manufacturing sector was seen contracting for the fourth consecutive month, according to an official factory survey, which came out today. The fall in oil prices supported the rupee. However, oil futures were up on Tuesday, following the International Monetary Fund’s upward revision of the 2024 global growth forecast. The IMF raised this year’s global growth forecast to 3.1%, up 20 basis points from its October projection. The IMF’s forecast was based on strong growth in the US and stimulus in China.
At 1618 IST, the March contract of Brent crude oil on the Intercontinental Exchange was at $81.90 a barrel compared with $82.87 a bbl on Tuesday. It was $82.40 a bbl on Monday. Oil marketing companies have also kept an eye on the developing situation in West Asia, amidst attacks on ships in the Red Sea.
FORWARDS
Premiums on the one-year dollar/rupee forward contracts fell today, despite a fall in US treasury yields as market participants refrained from placing fresh bets ahead of the outcome of the FOMC meeting, dealers said.
The benchmark 10-year US Treasury yield fell on Tuesday as the treasury on Monday said $760 bln is the expected borrowing for Jan-Mar, far lower than estimates of $816 bln. 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 155.26 paise, against 156.29 paise at Tuesday’s close. On an annualised basis, the premium was 1.86%, slightly up from 1.87% at Tuesday’s close.
OUTLOOK
On Thursday, the rupee will take cues from movements in the dollar index and crude oil prices after the FOMC decision at 0030 IST, 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 down on strong dollar post US jobs data
MUMBAI – The euro was down 0.2% against the dollar as the greenback strengthened following the release of the US job Openings and Labor Turnover Survey. Further, investors remain cautious ahead of the outcome of the US Federal Open Market Committee’s meeting on Thursday.
The data released by the labor department on Tuesday showed that job openings in the US rose in December, and it also revised numbers for November to show higher job openings. US job openings were up 101,000 to 9.02 mln in the last month of 2023, according to the Labor Department’s Bureau of Labor Statistics.
At 1522 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 103.50 compared with 103.41 on Tuesday. It was 103.46 on Monday.
The Australian dollar slipped 0.2% even as inflation in the country rose 0.6% in the Oct-Dec quarter, according to the latest data from the Australian Bureau of Statistics.
The pound sterling fell 0.1% against the dollar ahead of the UK S&P Global Manufacturing PMI for January, due Thursday.
Bucking the trend, the Japanese yen rose 0.1% against the greenback as Japan’s consumer confidence improved in January for the fourth straight month, hitting its highest level in over two years as higher consumer prices began to steadily ease, the government said today. The seasonally adjusted index of sentiment amongst households of two or more persons rose 0.8 points to 38.0, its highest level since December 2021. The Canadian dollar also rose 0.1% against the greenback. (Vaishali Tyagi)
India Rupee: Premiums steady on caution before US FOMC outcome Thu
NEW DELHI – Despite a fall in US Treasury yields, premiums on one-year dollar/rupee forward were largely steady today as market participants refrained from placing fresh bets ahead of the outcome of the US Federal Open Market Committee’s meeting on Thursday, dealers said.
“The market is not tracking US yields for now, there’s no paying or receiving as such,” said a dealer with a big state-owned bank. “FOMC is the main event, we will see any directional movement only after that.”
According to CME Group’s FedWatch tool, 97.9% of Fed Fund Futures traders expect the target rate to remain unchanged at 5.25-5.50% in this Fed meeting, and only 44.7% of them expect a 25-basis-point cut in March, with 54.4% of them expecting it to remain unchanged even then. Premiums on forwards of a currency pair are reflective of the interest rate differential between the two countries.
The benchmark 10-year US Treasury yield fell on Tuesday as the treasury on Monday said $760 bln is the expected borrowing for Jan-Mar, far lower than estimates of $816 bln. Market participants also assessed the US job openings data, which unexpectedly rose in December and data for the prior month was revised higher.
Job openings were up 101,000 to 9.02 mln in the last month of 2023, the Labor Department’s Bureau of Labor Statistics said in its monthly Job Openings and Labor Turnover Survey. November’s data was revised higher to show 8.93 mln unfilled positions instead of the previously reported 8.79 mln. A Reuters poll had forecast 8.75 mln job openings in November.
At 1440 IST, the premium on the one-year, exact-period dollar/rupee forward contract was 154.76 paise, against 156.29 paise at Tuesday’s close. On an annualised basis, the premium was at 1.86%, against the previous close of 1.87%. (Pratiksha)
India Rupee:Tad up on FX inflows; Budget FY25, FOMC meet outcome eyed
MUMBAI – The rupee was a tad up against the dollar on account of some foreign fund inflows into the domestic equities market, dealers said. The rupee also found some support before the announcement of the Interim Budget on Thursday, where investors expect some increase in capital expenditure by the government, they said.
“It (rupee) is up partially because of the expectation of a rise in capex in the budget, and partly because of the FOMC (US Federal Open market Committee) anticipation. We also saw there were some inflows from foreign banks,” a dealer with a state-owned bank said.
In the Indian Budget, market participants expect capital expenditure to rise in renewable energy and other green energy sectors, looking at the recent government push for a carbon-efficient economy, dealers said. The volume in the foreign exchange market remained low today, ahead of the US Federal Reserve’s rate decision early on Thursday, they added. Volumes in other crosses such as pound/rupee and euro/rupee rose, due to lacklustre volume in dollar/rupee.
In the US, market participants analysed the US job Openings and Labor Turnover Survey, which came in stronger than expected. This strengthened the dollar, thus capping gains for the rupee. The data released by the labour department on Tuesday showed that job openings in the US rose in December, and they also revised numbers for November to show higher job openings. At 1321 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 103.65 compared with 103.41 on Tuesday. It was 103.46 on Monday.
Crude oil prices eased, anticipating a fall in demand, after China’s manufacturing industry was seen contracting for the fourth consecutive month, according to an official factory survey, which came out today. Oil futures rose on Tuesday, following the International Monetary Fund’s upward revision of the 2024 global growth forecast. At 1321 IST, the March contract of Brent crude oil on the Intercontinental Exchange was at $82.38 a bbl compared with $82.87 a bbl on Tuesday. It was $82.40 a bbl on Monday.
Market participants have turned their attention towards the release of the US ADP employment data due later today, post which the FOMC outcome and the Indian Budget become important economic events for them.
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 resistance for the Indian currency at 82.90 a dollar. (Sourabh Kumar)
India Rupee – Asia FX: Most down on strong dlr; S Korea won dn 0.4%
MUMBAI – Most Asian currencies were down against the dollar today as the dollar index rose post the US Job Openings and Labor Turnover Survey, which came in stronger than expected on Tuesday. Job openings in the US rose unexpectedly in December and data for the prior month was revised higher, the Labor Department said, suggesting that demand in the country’s labour market remains strong.
US job openings were up 101,000 to 9.02 mln in the last month of 2023, according to the Labor Department’s Bureau of Labor Statistics. According to the CME Fedwatch Tool, chances of a rate cut in March have decreased to 42.8% from 73.4% in December last week. At 1105 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 103.60 compared with 103.41 on Tuesday. It was 103.46 on Monday.
Asian currencies took cues from China’s manufacturing purchasing managers’ index data for January, released today. The data indicated contraction in manufacturing activity for the fourth consecutive month. China’s official manufacturing purchasing managers’ index rose to 49.2 in January from 49 in December, the National Bureau of Statistics said today. A reading above 50 indicates expansion in activity, while a reading below it indicates contraction.
The South Korean won slipped 0.4% against the dollar. South Korea’s output from the manufacturing sector fell the most in 25 years in 2023 mainly due to weak demand for semiconductors amid an industry downtrend, data showed today. Retail sales and investment also tumbled last year amid high interest rates and inflationary pressures, and concerns over weak domestic demand.
The Taiwan dollar fell 0.4% against the dollar. The Thai baht weakened 0.3% against the US unit as Thailand recorded a trade deficit with China in 2023 for the fifth consecutive year. The Malaysian ringgit too dipped and the Philippines peso fell 0.1% against the greenback. The Indonesian rupiah was largely steady against the US unit. (Vaishali Tyagi)
India Rupee: Steady for lack of triggers ahead of FOMC outcome
MUMBAI – The rupee was steady against the dollar in the absence of any significant triggers and also due to subdued volume in the currency market, dealers said. Traders refrained from taking any large bets ahead of the outcome of the Federal Open Market Committee’s meeting at 0030 IST, Thursday, they said.
Dealers said market participants have turned their attention towards the upcoming US economic events, particularly the release of the US ADP employment data due later today, followed by a crucial US FOMC outcome for signals in the Fed’s guidance, which will set the tone for future market movements.
“Currently, there is nothing at all happening in the market as there are no market participants due to which volume is dull these days,” a dealer at a big state-owned bank said. “The dollar-rupee pair is likely to remain range bound today and will move in the 6 paise range.”
Dealers said apart from US FOMC outcome, investors are also eyeing the Interim Budget for 2024-25 (Apr-Mar), due on Thursday for further cues. “Due to election year, this time budget is also being eyed by the market participants.” a dealer at a big state-owned bank said. “Also, this time budget may bring some inflows into the equities but it will happen in the later months.”
A rise in the dollar index weighed on the Indian unit. The dollar rose on the back of US job Openings and Labor Turnover Survey, which came in stronger than expected. The data was released on Tuesday. US job openings unexpectedly rose in December and data for the prior month was revised higher, the Labor Department said, suggesting that demand in the labour market remains strong.
Job openings were up 101,000 to 9.02 mln in the last month of 2023, according to the Labor Department’s Bureau of Labor Statistics. According to the CME’s FedWatch Tool, market participants trimmed expectations of the Fed cutting interest rates as early as March. Chances of a rate cut in March have decreased to 42.8% from 73.4% in December.
At 0951 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 103.62 compared with 103.41 on Tuesday. It was 103.46 on Monday.
Meanwhile, crude oil prices increased, which also weighed on the rupee, following the International Monetary Fund’s upward revision of the 2024 global growth forecast, offsetting worries about demand from China, the world’s largest oil importer, dealers said. The heightened growth expectations are anticipated to stimulate demand for oil, consequently contributing to the upward surge in crude prices. The IMF raised this year’s global growth forecast to 3.1%, up by 20 basis points from its October projection. The IMF’s forecast was based on strong growth in the US and stimulus in China. At 0930 IST, the March contract of Brent crude oil on the Intercontinental Exchange was at $82.51 a bbl compared with $82.87 a bbl on Tuesday. It was $82.40 a bbl on Monday. Crude prices went to $82.94 a bbl today.
The domestic currency may also take cues from China’s manufacturing Purchasing Managers’ Index data for January, released today. The data indicated a contraction in the manufacturing activity for a fourth consecutive month. China’s official manufacturing purchasing managers’ index rose to 49.2 in January from 49 in December, the National Bureau of Statistics said today. A reading above 50 indicates an expansion in activity, while a reading below it indicates contraction.
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 31
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 Aditya Sakorkar
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