Informist, Friday, Feb 2, 2024
By Kabir Sharma
NEW DELHI – The rupee ended off highs against the dollar today, as banks bought the greenback on behalf of oil marketing companies and other importers, dealers said. “Oilers were there as it went down, they are stocking up,” a dealer at a foreign bank said.
After moving in a range of around 10 paise, the rupee closed at 82.9175 a dollar against 82.9650 on Thursday. The Indian currency remained near the two-week-high level touched on Thursday.
Oil marketing companies bought dollars to stock up on the commodity, taking advantage of the relatively lower dollar/rupee and crude oil levels, dealers said. Oil prices fell on Thursday as investors assessed efforts towards a ceasefire between Israel and Hamas, which could put an end to the geopolitical crisis that has pushed oil prices higher in recent months.
However, oil prices got support after Reuters reported that the Organization of the Petroleum Exporting Countries and its allies led by Russia decided to stay put on their resolve to cut output by 2.2 mln bbl per day, as announced in November.
At 1534 IST, the April contract of Brent crude oil on the Intercontinental Exchange was at $79.10 a barrel, compared with $78.70 a bbl on Thursday and $81.71 a bbl on Wednesday.
The rupee opened higher against the dollar on the back of robust foreign portfolio inflows into the Indian debt and equities markets, dealers said. A cut in the estimate for fiscal deficit supported the demand for Indian bonds and the currency, they said.
Finance Minister Nirmala Sitharaman announced the country’s fiscal deficit numbers during the Interim Budget speech in Parliament on Thursday. The Interim Budget projected the fiscal deficit for 2024-25 (Apr-Mar) at 5.1% of GDP. An average of estimates by economists and market participants polled by Informist had seen the fiscal deficit for the next financial year at 5.3% of GDP. The government also lowered the fiscal deficit target for the current financial year to 5.8% of GDP from 5.9%.
The Indian unit also found support from a weak dollar index. The index eased on the back of a slump in US Treasury yields, which dropped to their lowest levels so far in 2024 on Thursday after higher-than-expected jobless claims data.
The US labour department said initial claims for state unemployment benefits increased by 9,000 to a seasonally adjusted 224,000 for the week ended Jan 27. Economists had forecast 212,000 claims for the latest week. According to CME’s FedWatch Tool, less than 40% of Fed fund futures traders expect a rate cut in March. Fed fund futures traders see as much as a 35.5% chance, down from 52.8% on Wednesday, that the central bank may cut interest rates by 25 basis points in March, according to the CME FedWatch Tool.
At 1533 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 102.93 compared with 103.04 on Thursday. It was at 103.54 on Wednesday.
FORWARDS
Premiums on one-year dollar/rupee forward contracts fell, despite a fall in US Treasury yields after the release of US jobless claims data, dealers said.
“Even though USTs (US Treasury yields) are falling, state-owned banks have been receiving heavily, pulling the premiums down,” a dealer at a foreign bank 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 151.60 paise, against 153.58 paise at Thursday’s close. On an annualised basis, the premium was 1.82%, against Thursday’s close of 1.85%.
OUTLOOK
On Monday, the rupee will take cues from movement in the dollar index and crude oil prices, dealers said. Market participants now look forward to the US employment report for January, due later today.
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: Australian dollar up post strong Oct-Dec PPI
MUMBAI – The Australian dollar strengthened 0.3% against the dollar after the country’s producer price index, released by the Australian Bureau of Statistics, rose 4.1% in Oct-Dec, against the previous quarter’s 3.8%.
The euro rose 0.1% against the greenback. In January, the Eurozone preliminary Core Harmonized Index of Consumer Prices rose 3.3% on an on-year basis, surpassing the expected 3.2% growth, but slightly lower than the earlier month’s 3.4% growth.
The pound sterling was steady against the greenback in the early European trading hours. Market participants expect the Bank of England to cut rates later than the US Federal Reserve, which itself indicated no cuts at the March Federal Open Market Committee meeting. Bank of England Governor Andrew Bailey avoided speculation about rate cuts and warned that price pressures could pick up again in the second half of this year.
The dollar index eased on the back of a slump in US Treasury yields, which dropped to their lowest levels so far in 2024 on Thursday after the release of a higher than expected jobless claims data. The index also fell after data showed initial claims for state unemployment benefits rose higher than expected last week, giving way to some hopes of a rate cut by the US Federal Reserve in March. However, comments from US Fed Chair Jerome Powell, post the Federal Open Market Committee meeting on Thursday, doused expectations of an early rate cut.
At 1502 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 102.93 compared with 103.04 on Thursday. It was at 103.54 on Wednesday. The US Labor Department said initial claims for state unemployment benefits increased by 9,000 to a seasonally adjusted 224,000 for the week ended Jan 27. Economists had forecast 212,000 claims for the latest week. Investors are now looking forward to non-farm payrolls data from the US due later today. (Sourabh Kumar)
India Rupee: Up on bks’ dlr sales for FX inflows into equities, debt
NEW DELHI – The rupee remained up against the dollar as banks persistently sold the greenback for foreign fund inflows into the domestic equities and bond markets after the announcement of the 2024-25 (Apr-Mar) Interim Budget, dealers said. “Post-Budget flows are hitting the market hard, there are massive flows today in debt and in equities too,” a dealer at a foreign bank said.
The lower revision of India’s fiscal deficit supported the domestic currency, dealers said. Finance Minister Nirmala Sitharaman announced the country’s fiscal deficit numbers during the Interim Budget speech in Parliament on Thursday. The Interim Budget projected the fiscal deficit for 2024-25 (Apr-Mar) at 5.1% of the GDP. An average of estimates of economists and market participants polled by Informist saw the fiscal deficit for the next financial year at 5.3% of GDP. The government also lowered the fiscal deficit target for the current financial year to 5.8% of GDP from 5.9% earlier.
A surge in domestic equities also supported the rupee, dealers said. At 1259 IST, the Sensex and the Nifty 50 were up 0.8% each. The Nifty 50 hit a fresh lifetime high of 22126.80 points today with gains in power, oil, and information technology stocks.
The dollar index remained weak, which also supported the Indian unit, dealers said. The index slumped after data showed initial claims for state unemployment benefits rose higher than expected last week, giving way to some hopes of a rate cut by the US Federal Reserve in March. However, comments from US Fed chair Jerome Powell post the Federal Open Market Committee meeting on Thursday, doused expectations of an early rate cut.
“Inflation is still too high. Ongoing progress in bringing it down is not assured,” Powell said after the Fed’s policy-setting committee kept the benchmark overnight interest rate in the 5.25-5.50% range. Powell added that rate cuts would not be appropriate until there is “greater confidence that inflation is moving” towards the central bank’s 2% target.
A rise in the pound sterling also weighed on the dollar, dealers said. The pound sterling rose after Bank of England Governor Andrew Bailey said that “we need to see more evidence that inflation is set to fall all the way to the 2% target, and stay there” before rates can be lowered. At 1318 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 103.00 compared with 103.04 on Thursday. It was at 103.54 on Wednesday.
Dealers said some banks bought the greenback on behalf of oil marketing companies, which limited gains for the Indian unit. Oil companies stocked up on the commodity, noting relatively lower crude prices. Oil price fell on Thursday as investors assessed the efforts towards a ceasefire between Israel and Hamas that could put an end to the geopolitical crisis that has pushed oil prices upward in recent months. At 1325 IST, the April contract of Brent crude oil on the Intercontinental Exchange was at $79.20 a barrel, compared with $78.70 a bbl on Thursday and $81.71 a bbl on Wednesday.
Dealers also said if the Indian unit rises above the 83.80 a dollar level, there is no stopping it till 82.65. For the rest of the day, the rupee is seen in the range of 82.80-83.30 against the dollar, dealers said. (Kabir Sharma)
India Rupee – Asia FX: Most up on weak dlr; S Korea won up 0.5%
MUMBAI – Most Asian currencies were up against the greenback as the dollar index was weighed down by a slump in US Treasury yields, which dropped to their lowest levels so far in 2024 on Thursday after higher-than-expected jobless claims data.
The US labour department said initial claims for state unemployment benefits increased by 9,000 to a seasonally adjusted 224,000 for the week ended Jan 27. Economists had forecast 212,000 claims for the latest week. Fed fund futures traders gave as much as a 35.5% chance, down from 52.8% on Wednesday, that the central bank may cut interest rates by 25 basis points in March. At 1137 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 103.02 compared with 103.04 on Thursday. It was at 103.54 on Wednesday.
Asian currencies also took cues from January inflation figures out of South Korea and producer prices from Australia. The South Korean won rose 0.5% against the dollar as South Korea’s Finance Minister Choi Sang-mok said, inflation might rebound to around 3% in February and March as the recent geopolitical situation in West Asia is driving up oil prices. However, South Korea’s CPI grew 2.8% on-year, slightly below the 2.9% expected in a Reuters poll of economists.
The Taiwan dollar was up 0.4% against the dollar while the Philippines peso rose 0.3% against the greenback. The Malaysian ringgit strengthened 0.1% against the greenback. The Thai baht was largely steady against the US unit. The Indonesian rupiah was 0.6% up against the greenback. (Vaishali Tyagi)
India Rupee: At 2-wk high on bks’ dlr sales for FX inflows into debt
MUMBAI – The rupee was at a two-week high against the dollar as a few foreign banks sold the greenback for foreign fund inflows into the Indian debt market after the announcement of the 2024-25 (Apr-Mar) Interim Budget, dealers said.
“We are seeing heavy selling today by foreign banks for bond inflows after the announcement of the Budget in which the government lowered the fiscal deficit target,” a dealer at a state-owned bank said. “I would say, the rupee moves in a very weird way because if few traders start selling, then everybody comes for selling and no one comes for buying but if some buying comes in than we see heavy buying afterwards,” he said.
Finance Minister Nirmala Sitharaman announced the country’s fiscal deficit numbers during the Interim Budget speech in Parliament on Thursday. The Interim Budget projected the fiscal deficit for 2024-25 (Apr-Mar) at 5.1% of the GDP. An average of estimates of economists and market participants polled by Informist saw the fiscal deficit for the next financial year at 5.3% of GDP. The government also lowered the fiscal deficit target for the current financial year to 5.8% of GDP from 5.9% earlier.
The Indian unit also found support from a weak dollar index. The dollar index eased on the back of a slump in US Treasury yields, which dropped to their lowest levels so far in 2024 on Thursday after higher-than-expected jobless claims data.
The US labour department said initial claims for state unemployment benefits increased by 9,000 to a seasonally adjusted 224,000 for the week ended Jan 27. Economists had forecast 212,000 claims for the latest week. According to CME’s FedWatch Tool, less than 40% of Fed fund futures traders expect a rate cut in March. Fed fund futures traders gave as much as a 35.5% chance, down from 52.8% on Wednesday, that the central bank may cut interest rates by 25 basis points in March, according to the CME FedWatch Tool.
At 0958 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 103.01 compared with 103.04 on Thursday. It was at 103.54 on Wednesday.
A rise in domestic equities also supported the Indian unit. At 0931, the BSE Sensex and Nifty 50 were 1% higher. Now, investors have turned their attention to US employment report for January, due later today.
For the rest of the day, the rupee is seen in the range of 82.80-83.30 against the dollar, dealers said. They pegged the key technical resistance for the Indian currency at 82.80 a dollar. (Vaishali Tyagi)
India Rupee: Expected range for rupee – Feb 2
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 Avishek Dutta
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 (11) 4220-1000
Send comments to [email protected]
© Informist Media Pvt. Ltd. 2024. All rights reserved.
Source: Cogencis
