Informist, Monday, Feb 5, 2024
By Vaishali Tyagi
MUMBAI – The rupee ended sharply lower against the dollar today as the dollar index surged after stronger than expected US jobs data for January, dealers said.
“As you see, dollar index has gained strength in European trading hours, due to which rupee is down,” a dealer with a state-owned bank said. “We did not see too many buyers and sellers (of dollars) today. Very little buying was there at 83.04 a dollar level. There was some support around 83.07 a dollar.”
After moving in a thin range of 7 paisa throughout the day, the rupee closed 0.2% lower at 83.0550 a dollar today. Other Asian currencies slipped in the range of 0.2%-0.7% a dollar. The Malaysian ringgit was the worst performer among its emerging market peers.
The rupee opened sharply down against the greenback at 83.0350 a dollar as the dollar index rose to an eight-week high in early trade after a robust US jobs report for January indicated that the US Federal Reserve may not cut interest rates as soon as earlier expected.
US non-farm payrolls data from the Labor Department on Friday showed that the world’s largest economy added 353,000 jobs in January, against a forecast of 180,000 in a Reuters poll. The unemployment rate was lower than expected, and wages grew more than forecast. The unemployment rate for the month was at 3.7%, against Bloomberg’s estimate of 3.8%.
US Fed Chair Jerome Powell on Sunday discussed risks to inflation, expected rate cuts, and the banking system with media outlet CBS News. In the discussion, he reiterated that expecting a rate cut in March would be too soon. He said the economy could move towards a rate cut sooner if labour market weakness or inflation come down “really persuasively”.
Fed fund futures traders are now pricing in only a 15% probability that the Fed will cut rates at its next meeting in March, compared with a nearly 50% chance a week ago, according to the CME Group’s FedWatch tool. At 1631 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 104.27 compared with 103.96 on Friday and 103.04 on Thursday.
For the majority of the day, the rupee remained in a very narrow range of 83.00-83.04 a dollar as the impact of strength in the dollar index was partly offset by dollar sales by a few exporters.
Some banks sold dollars on behalf of exporters who wanted to take advantage of the relatively higher dollar/rupee levels, dealers said. The rupee fell to the day’s low of 83.0650 a dollar as the dollar index rose further in European trade, dealers said.
Towards the end of the session, a few state-owned banks bought dollars for oil marketing companies, noting a fall in prices, which weighed on the Indian currency, dealers said. Oil futures closed 2% lower on Friday after expectations of a rate cut by the US Fed were pushed back further following strong jobs data, which could hurt the demand for crude. Slow growth in China and the likelihood of some tensions easing in West Asia also weighed on prices of the commodity. At 1631 IST, the April contract of Brent crude oil on the Intercontinental Exchange was at $76.91 a barrel, compared with $77.33 a bbl on Friday and $78.70 a bbl on Thursday.
A fall in domestic equities also weighed on the Indian unit, dealers said. Today, the Sensex and Nifty 50 ended 0.5% and 0.4% down, respectively.
FORWARDS
The premiums on one-year dollar/rupee forwards ended at an over one-month low today, tracking a jump in US Treasury yields, dealers said.
The yield on the 10-year US Treasury note surged on Friday after data showed higher-than-expected jobs growth in January, dampening hopes of a cut in interest rates by the US Federal Reserve in the near future. Premiums on forwards of a currency pair are reflective of the interest rate differential between the two countries.
Meanwhile, some banks bought dollars for forward delivery, noting relatively lower levels, which limited losses for the premiums, dealers said. The premium on the one-year, exact-period dollar/rupee forward contract was at 146.50 paise, against 151.60 paise on Friday. On an annualised basis, the premium was 1.76%, against Friday’s close of 1.82%.
OUTLOOK
On Tuesday, the rupee will take cues from movement in the dollar index and crude oil prices, dealers said. Investors await US Jan global services purchasing managers index, due later today.
“Rupee is expected to be in a range of 82.90 to 83.30 as dollar buyers and sellers will counter each other,” said Anil Kumar Bhansali, head of treasury and executive director, Finrex Treasury Advisors LLP.
During the day, the rupee is seen in a range of 82.80-83.30 a dollar, with key technical support pegged at 83.30 a dollar.
India Rupee – World FX: Dlr index hits 8-wk high on strong jobs data
India Rupee – World FX: Dlr index hits 8-wk high on strong jobs data
MUMBAI – The dollar index surged to an eight-week-high today after a robust US jobs report for January indicated that the US Federal Reserve may not cut interest rates as soon as earlier expected.
The US non-farm payrolls data from the Labor Department on Friday showed that the world’s largest economy added 353,000 jobs in January, against a forecast of 180,000 in a Reuters poll. The unemployment rate was lower than expected, and wages grew more than forecast. The unemployment rate for the month was at 3.7%, against Bloomberg’s estimate of 3.8%.
Further, US Federal Reserve Chair Jerome Powell on Sunday discussed risks to inflation, expected rate cuts, and the banking system with media outlet CBS News. In the discussion, he reiterated that expecting a rate cut in March would be too soon. He said the economy could move towards a rate cut sooner if labour market weakness or inflation come down “really persuasively”.
According to the CME Group’s FedWatch tool, 84.5% of Fed fund futures traders expect the key interest rate to remain at 5.25-5.50% at the Fed’s policy meeting in March, as against 52.3% before the Federal Open Market Committee’s last meeting outcome early on Thursday. At 1433 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 104.04 compared with 103.96 on Friday. It was at 103.04 on Thursday. The index rose to an eight-week high of 104.19 earlier today.
Both the euro and pound sterling fell 0.1% against the dollar ahead of the Eurozone services purchasing managers index and UK S&P Global services purchasing managers index, respectively.
The Japanese yen fell 0.1% against the dollar, while the Australian dollar remained flat against the greenback. (Vaishali Tyagi)
India Rupee: Premiums hit 1-mo low as US ylds jump post US jobs data
MUMBAI – Premiums on one-year dollar/rupee forward contracts fell to a one-month low today, tracking a jump in US Treasury yields, dealers said. The yield on the 10-year US Treasury note surged on Friday after data showed a higher-than-expected jobs growth in January, fading hopes of a cut in interest rates by the US Federal Reserve in the near future.
The US non-farm payrolls data from the labour department on Friday showed that the world’s largest economy added 353,000 jobs in January, as against forecast in a Reuters poll of payrolls increasing 180,000 in January. Premiums on forwards of a currency pair are reflective of the interest rate differential between the two countries.
On Sunday, US Fed Chair Jerome Powell, in a discussion with media outlet CBS News, said that a rate cut in March would be too soon. He said the economy could move towards a rate cut sooner if labour market weakness or inflation “really persuasively” came down. Fed fund futures traders are now pricing in only a 15% probability that the Fed will cut rates at its next meeting in March, compared with a nearly 50% chance a week ago, according to the CME Group’s FedWatch tool.
“There is a lot of receiving in the market due to the US yields. 1.60% looks like a support,” said a dealer with a big state-owned bank. “Of course, some profit booking is there from banks.” Meanwhile, some banks bought dollars for forward delivery, noting relatively lower levels, which limited losses for the premiums, dealers said.
At 1403 IST, the premium on the one-year, exact-period dollar/rupee forward contract was 147.00 paise, against 151.60 paise at Friday’s close. On an annualised basis, the premium was at 1.77%, against the previous close of 1.82%. Premium fell to a one-month low of 1.76% earlier today. (Pratiksha)
India Rupee:In thin band; some exporters’ dlr sales offset strong dlr
MUMBAI – The rupee was trading in a narrow range against the dollar, as the impact of strength in the dollar index was partly offset by dollar sales by a few exporters, dealers said. The rupee has moved in a range of only 5 paise so far today.
“The buying (of dollars) is more in general because of strength in the dollar, but since the dollar/rupee has opened some 10 paise higher today, we are finding sellers (of dollars),” a dealer at a private bank said.
The greenback strengthened after non-farm payrolls data in the US for January came in much stronger than expected. The US added 353,000 jobs in January, against the forecast of 180,000 in a Reuters poll. The dollar index strengthened further after US Federal Reserve Chair Jerome Powell, in an interview to CBS News on Sunday, said that expecting a rate cut in March would be too soon.
According to the CME Group’s FedWatch tool, 84.5% of Fed fund futures traders expect the key interest rate to remain at 5.25-5.50% at the Fed’s March policy meeting, as against 52.3% before the Federal Open Market Committee’s last meeting outcome early on Thursday. At 1325 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 104.03 compared with 103.96 on Friday. It was at 103.04 on Thursday. The index rose to an eight-week high of 104.19 earlier today.
Meanwhile, some banks sold dollars on behalf of exporters who wanted to take advantage of the relatively higher dollar/rupee levels, dealers said.
However, dealers said the volume in the currency market was dull as most market players refrained from placing fresh bets, awaiting further cues on the trajectory of the dollar index, dealers said.
Market participants are also waiting for the eurozone and the UK’s services purchasing managers index readings for January, due later today, and the Reserve Bank of India’s monetary policy meeting outcome on Thursday. Market participants expect the RBI to keep the repo rate unchanged at 6.50%.
For the rest of the day, the rupee is seen in the range of 82.90-83.20 against the dollar, dealers said. They pegged key technical support for the Indian currency at 83.30 a dollar. (Sourabh Kumar)
India Rupee: Down as dlr surges post stronger-than-view US jobs data
MUMBAI – The rupee was down against the dollar as the dollar index rose to an eight-week high on the back of a stronger-than-expected US jobs report for January, dealers said. The key economic data indicated that the US Federal Reserve may not cut interest rates as soon as investors had hoped. Investors’ expectations of a rate cut at the US Federal Open Market Committee’s meeting in March have now dimmed.
The US non-farm payrolls data from the labour department on Friday showed that the world’s largest economy added 353,000 jobs in January, as against forecasts in a Reuters poll of payrolls increasing 180,000 in January. The unemployment rate was lower than expected, and wages grew more than forecast. The unemployment rate for the month in the US was at 3.7%, against Bloomberg’s estimate of 3.8%.
On Sunday, US Federal Reserve Chair Jerome Powell discussed risks to inflation, expected rate cuts, and the banking system with media outlet CBS News. In the discussion, he reiterated that expecting a rate cut in March would be too soon. He said the economy could move towards a rate cut sooner if labour market weakness or inflation “really persuasively” came down. “If the economy were to weaken, then we could reduce rates earlier and perhaps faster. If the economy were to prove — if inflation were to prove more persistent, that could call for us to reduce rates later and perhaps slower,” Powell said.
A dealer at a state-owned bank said, “As we have seen, the US non-farm payroll data came stronger than expected. Powell’s remark that a rate cut by the Fed is not that eminent very soon pushed it (dollar) up. The effect is visible on all Asian currencies, including our currency (rupee) as well… We are seeing some equity outflows as well today.”
According to the CME Group’s FedWatch tool, 84.5% of Fed fund futures traders expect the key interest rate to remain at 5.25-5.50% at the Fed’s March policy meeting, as against 52.3% before the Federal Open Market Committee’s February meeting outcome early Thursday. At 0920 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 104.04 compared with 103.96 on Friday. It was at 103.04 on Thursday. The index rose to an eight-week high of 104.19 earlier today.
Meanwhile, low crude prices limited the losses for the rupee, dealers said. Oil futures closed 2% lower on Friday after expectations of a rate cut by the US Fed were pushed back further following strong jobs data, which could hurt the demand for crude. Further, slow growth in China and the likelihood of some tensions easing in West Asia also weighed on the prices of the commodity. At 0920 IST, the April contract of Brent Crude oil on the Intercontinental Exchange was at $77.57 a barrel, compared with $77.33 a bbl on Friday and $78.70 a bbl on Thursday.
Market participants now await the Reserve Bank of India’s upcoming Monetary Policy Committee meeting outcome on Thursday. They largely expect the central bank to keep the repo rate and stance unchanged.
For the rest of the day, the rupee is seen in the range of 82.90-83.20 against the dollar, dealers said. They pegged the key technical support for the Indian currency at 83.30 a dollar. (Vaishali Tyagi)
India Rupee – Asia FX: Most dn as dlr surges post strong US jobs data
Informist, Monday, Feb 5, 2024
MUMBAI – Most Asian currencies were down against the dollar as the dollar index strengthened and hit an eight-week-high today after jobs data in the US came in stronger than expected. Data released on Friday showed US non-farm payrolls for January rose by 353,000 against a forecast in a Reuters poll of an addition of 183,000 jobs last month.
The stronger-than-expected jobs report suggested that the US Federal Reserve may not cut interest rates as soon as investors had hoped. According to the CME Group’s FedWatch tool, 84.5% of Fed fund futures traders expect the key interest rate to remain unchanged at 5.25-5.50%, as against 52.3% before the Federal Open Market Committee meeting’s outcome early Thursday. Moreover, the unemployment rate in the US also came in lower than expectation in January. It was at 3.7% last month against Bloomberg’s estimate of 3.8%.
Further, on Sunday, US Fed Chair Jerome Powell discussed risks to inflation, expected rate cuts, and the banking system with media outlet CBS News. In the discussion, he reiterated that a rate cut in March would be too soon. He said the economy could move towards a rate cut sooner if labour market weakness or inflation “really persuasively” came down.
Powell’s comments further strengthened the dollar index. At 0848 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 104.07 compared with 103.96 on Friday. It was at 103.04 on Thursday. The index rose to an eight-week high of 104.19 earlier today.
The South Korean won fell the most, by 1% against the greenback. The Malaysian ringgit and Taiwan dollar fell 0.8% and 0.5%, respectively, against the US unit. The Indonesian rupiah was down 0.4% against the dollar. Bank Indonesia Governor Perry Warjiyo said on Saturday that the country’s central bank has room to cut rates this year to give some support to Indonesia’s economic growth, but is waiting for the rupiah to strengthen against the greenback. (Sourabh Kumar)
India Rupee: Expected range for rupee – Feb 5
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
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