Informist, Thursday, Feb 8, 2024
By Vaishali Tyagi
MUMBAI – The rupee ended steady against the dollar today as banks purchased the greenback for oil marketing companies and importers, which offset their dollar sales for foreign fund inflows, dealers said. The rupee was steady post the Reserve bank of India’s monetary policy announcement today, where the central bank kept the repo rate unchanged.
“Yes, very early after the market opened there was selling (of dollars), after that there were buying (of dollars) for importers and oil companies around 82.95 a dollar level,” a dealer at a state-owned bank said. “This was expected from the central bank (policy rate decision) and no notable effect was seen on (the rupee) movement.”
Today, the rupee moved in a 12-paise range throughout the day and settled at 82.9550 a dollar. It settled at 82.9675 a dollar on Wednesday. The rupee closed above the 83.00-a-dollar mark for the second consecutive day.
The rupee opened steady against the dollar amid caution ahead of the Reserve Bank of India’s Monetary Policy Committee meeting’s outcome which commenced at 1000 IST, today, dealers said. The Committee decided to leave the policy repo rate unchanged at 6.50% and opted to continue its stance of “withdrawal of accommodation” to facilitate a gradual alignment of inflation with the target, while still supporting economic growth. This marked the final meeting of the MPC for the current fiscal year ending in March.
The rate-setting panel’s decision was in line with expectations. In an Informist poll, all 27 respondents had said they expected the committee to leave the repo rate unchanged at 6.50%, and an overwhelming majority expected the MPC to continue with the “withdrawal of accommodation” stance.
Within an hour of opening, the rupee gained strength against the dollar and rose to the day’s high of 82.8850 a dollar as a few foreign banks sold the greenback on account of foreign fund inflows into the equities and debt market, dealers said.
When the rupee was trading higher, some dealers speculated that a few state-owned banks purchased dollars at around 82.90 a dollar, likely on behalf of the RBI to contain the volatility in the exchange rate.
Dealers said that oil marketing companies rushed to stock up on the commodity, noting the lower dollar/rupee levels. Oil futures increased for the third day in a row on Wednesday, propelled by a more-than-expected drop in US fuel inventories and escalating tensions in West Asia.
In the week ended Friday, US stocks fell by 3.15 mln barrels, which contradicted analysts’ forecasts of a 140,000 barrel rise, as per the US Energy Information Administration. At 1715 IST, the April contract of Brent crude oil on the Intercontinental Exchange was at $79.93 a barrel, compared with $79.21 a bbl on Wednesday and $78.59 a bbl on Tuesday.
The rupee was supported by a slight weakening in the dollar index, dealers said. Market participants await fresh economic data from the US, after recent comments by US Federal Reserve officials suggested that fresh economic data from the country is being eyed for any decision regarding the interest rate trajectory.
According to CME Group’s FedWatch tool, Fed fund futures traders are now pricing in only a 20.5% probability that the US central bank will cut rates at its next meeting in March, compared with 38.0% a week ago. At 1715 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 104.23 compared with 104.04 on Wednesday. It was 104.14 on Tuesday.
After a few hours into trading, the rupee erased all gains against the greenback as banks persistently bought dollars on behalf of oil marketing companies. Following this, the Indian unit fell to the day’s low of 83.00 a dollar.
Towards the closing hour of the market, the rupee went slightly up against the dollar as some banks sold dollars on behalf of exporters, on expectations of appreciation in the local unit going ahead, dealers said.
“We saw few exporters today, and we are expecting them to come at these (82.95 a dollar) level because expectation are high that it (rupee) will go up in coming weeks,” a dealer at a state-owned bank said.
FORWARDS
Premium on one-year dollar/rupee forward contracts was largely steady as the Reserve Bank of India’s monetary policy announcement today was on expected lines, dealers said.
The yield on the 10-year benchmark US Treasury note was steady on Wednesday as investors assessed fresh comments from Fed officials suggesting that the central bank would proceed with caution before cutting rates. Fed Boston President Susan Collins said on Wednesday that if the US economic growth meets her expectations, the Fed will likely start cutting rates later this year. Premiums on forwards of a currency pair are reflective of the interest rate differential between the two countries.
Market participants see technical support for the one-year dollar/rupee forward premium at 1.90%. At 1530 IST, the premium on the one-year, exact-period dollar/rupee forward contract was at 149.79 paise, against 150.66 paise at close on Wednesday. On an annualised basis, the premium was at 1.80%, against 1.81% at the previous close.
OUTLOOK
On Friday, the rupee will take cues from movement in the dollar index and crude oil prices, dealers said. Investors now await US weekly export sales data, due later today.
During the day, the rupee is seen in a range of 82.80-83.30 a dollar, with key technical resistance pegged at 82.90 a dollar.
India Rupee – World FX:Japanese yen dn on BoJ deputy governor’s view
MUMBAI – The Japanese yen fell 0.4% against the dollar after the Bank of Japan Deputy Governor Uchida Shinichi hinted at ending negative rates, however, not so quickly. “Even if the BoJ were to end our negative interest rate policy, it’s hard to imagine a path in which it would then keep raising the interest rate rapidly,” Uchida said.
The Australian dollar fell 0.2% against the greenback as China posted its fourth monthly fall in CPI. The CPI for January fell 0.8% on year in China, more than expectations of a 0.5% fall, as per a Reuters poll. The producer price index of the country also saw a decline for the 16th month in January, when it fell 2.5% on year. These data prints were released by the National Bureau of Statistics today. China is Australia’s largest trading partner and the health of Chinese economy has a bearing on Australia.
The pound sterling weakened 0.1% against the US unit ahead of comments by Bank of England policymaker Catherine Mann later today, as investors wait for more guidance on interest rates. On Wednesday, the UK central bank Deputy Governor Sarah Breeden said that the central bank is now focusing on how long interest rates are necessary to remain unchanged.
The dollar index was broadly steady as market participants awaited fresh economic data from the US for further cues for the interest rate trajectory. According to CME Group’s FedWatch tool, Fed fund futures traders are now pricing in only a 19% probability that the US central bank will cut rates at its next meeting in March, compared with 52.8% a week ago.
At 1433 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 104.08 compared with 104.04 on Wednesday. It was at 104.14 on Tuesday.
Investors now await the US weekly jobless claims and wholesale inventories data, both due later today. Moreover, the Federal Reserve Bank of Richmond President, Thomas Barkin is scheduled to speak later today. (Sourabh Kumar)
India Rupee: Premiums steady as RBI maintains rate, policy stance
MUMBAI – Premium on one-year dollar/rupee forward contracts was largely steady as the Reserve Bank of India’s monetary policy announcement today failed to lend cues on the central bank’s rate trajectory, dealers said.
“We did not expect much from the central bank’s policy decision, it was the same as we expected, so not much movement was seen in the overall market, though some paying pressure was there, but more or less it (premium) was the same,” a dealer at a state-owned bank said.
The Monetary Policy Committee today kept the policy repo rate unchanged at 6.50% and decided to maintain its stance of “withdrawal of accommodation” to ensure inflation progressively aligns with the target, while supporting growth.
The rate-setting panel’s decision was in line with expectations. In an Informist poll, all 27 respondents said they expected the committee to leave the repo rate unchanged at 6.50%, and an overwhelming majority expected the MPC to continue with the “withdrawal of accommodation” stance.
Further, yields on the benchmark US Treasury note were steady on Wednesday as investors assessed fresh comments from Fed officials suggesting that the Fed would proceed with caution before cutting rates. Fed Boston President Susan Collins said on Wednesday that if the US economic growth meets her expectations, the Fed will likely start cutting rates later this year. Premiums on forwards of a currency pair are reflective of the interest rate differential between the two countries.
At 1501 IST, the premium on the one-year, exact-period dollar/rupee forward contract was 149.69 paise, against 150.66 paise at Wednesday’s close. On an annualised basis, the premium was at 1.80%, against 1.81% at the previous close. (Vaishali Tyagi)
India Rupee: Erases gains on oil cos’ dlr buys; MPC fails to lend cues
MUMBAI – The rupee erased all gains as banks bought dollars on behalf of oil marketing companies, dealers said. The rupee was steady during the Reserve bank of India’s monetary policy announcement today, where the central bank kept the repo rate unchanged.
“There was some buying probably for oilers only, a dealer with a state-owned bank said. “There was not much effect (on rupee) from the monetary policy announcement.”
Oil futures rose for the third consecutive day on Wednesday, driven by a larger-than-anticipated decline in the US fuel inventories and escalating tensions in West Asia. US stocks dropped by 3.15 mln barrels last week, contrasting analysts’ forecast of a 140,000 barrel increase, according to the US Energy Information Administration. At 1130 IST, the April contract of Brent crude oil on the Intercontinental Exchange was at $79.58 a barrel, compared with $79.21 a bbl on Wednesday and $78.59 a bbl on Tuesday.
The Reserve Bank of India’s Monetary Policy Committee today kept the policy repo rate unchanged at 6.50% and decided to maintain its stance of “withdrawal of accommodation” to ensure inflation progressively aligns with the target, while supporting growth. This was MPC’s last meeting for the current fiscal year ending March.
The rate-setting panel’s decision was in line with expectations. In an Informist poll, all 27 respondents said they expected the committee to leave the repo rate unchanged at 6.50%, and an overwhelming majority expected the MPC to continue with the “withdrawal of accommodation” stance.
The rupee was supported by a slight weakening in the dollar index, dealers said. At 1130 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 104.02 compared with 104.04 on Wednesday. It was 104.14 on Tuesday.
For the rest of the day, the rupee is seen in the range of 82.85-83.15 against the dollar, dealers said. They pegged key technical resistance for the Indian currency at 82.85 a dollar. (Sourabh Kumar)
India Rupee:Tad up on bks’ dlr sales for FX inflows; RBI policy eyed
MUMBAI – The rupee was slightly higher against the dollar as a few foreign banks sold the greenback on account of foreign fund inflows into the equities and debt market, dealers said. Dealers were cautious before the Reserve bank of India’s monetary policy committee outcome at 1000 IST, they said.
“There was selling (dollars) for the first 5-10 minutes,” a dealer with a state-owned bank said. “It (rupee) traded till 82.9250 a dollar during that time.”
The rupee got some support from a slightly weaker dollar index. The dollar index weakened as market participants waited for fresh economic data from the US. On Wednesday, Fed Boston President Susan Collins said that if the US economic growth meets her expectations, the Fed will likely start cutting rates later this year.
Dealers expect the Indian unit to be range-bound today. “Unless there is some different announcement in the MPC today, we expect it (rupee) to remain in the usual range,” the dealer said.
An Informist poll of economists, analysts and treasury heads showed that the domestic rate-setting panel is expected to keep the policy repo rate unchanged at 6.50%, and the stance as ‘withdrawal of accomodation’ at this policy meeting. Yet, the statement from the governor will be a key trigger for the currency markets.
However, a rise in crude oil futures exerted some pressure on the rupee, dealers said. Oil futures rose for the third consecutive day on Wednesday, driven by a larger-than-anticipated decline in the US fuel inventories and escalating tensions in West Asia. US stocks dropped by 3.15 mln barrels last week, contrasting analysts’ predictions of a 140,000 barrel increase, according to the US Energy Information Administration.
For the rest of the day, the rupee is seen in the range of 82.85-83.15 against the dollar, dealers said. They pegged key technical resistance for the Indian currency at 82.85 a dollar. (Sourabh Kumar)
India Rupee – Asia FX: Mixed; Thai baht dn most after rate decision
MUMBAI – Asian currencies were mixed against the dollar today. The dollar index remained largely steady as market participants waited for fresh economic data from the US, after recent comments by US Federal Reserve officials suggested that fresh economic data from the country was being eyed for any decision regarding the interest rate trajectory. Fed Boston President Susan Collins said on Wednesday that if US economic growth meets expectations, the Fed would likely start cutting rates later this year.
In the Asia-Pacific, consumer prices in China fell more than expected in January. In China, CPI for January fell 0.8% on year, more than expectation of a fall of 0.5% in a Reuters poll. Consumer prices have slipped for the fourth straight month. The producer price index of the country also saw a decline for the sixteenth month in January, when it fell 2.5% on year. These data prints were released by the National Bureau of Statistics today.
The Thai baht fell 0.3% against the greenback after Bank of Thailand kept its key policy rate unchanged at 2.5% at its monetary policy meeting on Wednesday.
The Taiwan dollar fell 0.1% despite a strong performance in export growth in January. The island nation’s exports rose 18.1% on year in January, against the previous month’s 11.8% rise. The electronic components industry, the backbone of the country’s exports, rose 7.5% on year last month due to robust demand for emerging new-age technologies such as artificial intelligence.
The Malaysian ringgit fell 0.1% against the US unit, while the Indonesian rupiah rose 0.6%. The Philippines peso rose 0.1% against the greenback. (Sourabh Kumar)
India Rupee: Expected range for rupee – Feb 8
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 Tanima Banerjee
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