Informist, Thursday, Feb 22, 2024
By Sourabh Kumar
MUMBAI – The rupee ended at an over-five-month high against the dollar today as foreign banks sold the greenback for foreign fund inflows into the domestic debt market, dealers said. “There were inflows today, and from foreign banks only, so we are not able to gauge in real-time exactly how much was the amount,” a dealer with a large state-owned bank said.
The rupee closed at 82.8400 a dollar against Wednesday’s close of 82.9700 a dollar. The Indian unit moved in a range of 9 paise during the day. The low for the day was 82.9500.
The rupee opened steady against the dollar and moved up on account of inflows into the debt market. Later, the rupee stabilised at 82.90 a dollar and moved in a thin band of 2–3 paise.
After a few hours into the trading session, the Refinitiv foreign exchange trading platform went down, which hampered the trading for some time. However, dealers said that the technical glitch did not impact them much, and they were able to resume their work normally. This was partly because of a dull market, as dealers speculated the Reserve bank of India’s presence on either side of the rupee’s movement.
Looking at the movement in dollar-rupee, dealers had speculated that the rupee may again close around 82.95-82.96 levels. However, during the last half-an-hour of the trading session, the rupee rose against the greenback and settled higher. Dealers said that the rupee was bolstered as the Federal Open Market Committee Meeting minutes, which were released on Wednesday, did not provide any different view on the rate trajectory from the last FOMC decision.
Meanwhile, traders await the Monetary Policy Committee’s minutes of the February meeting, scheduled to be released at 1700 IST, dealers said. In its meeting, the domestic rate-setting panel kept the repo rate unchanged at 6.50%, and maintained the “withdrawal of accommodation”‘ stance. Dealers said that Mar 11 is a key day to watch out for, eyeing what the Reserve Bank of India will do regarding the maturity of the dollar-rupee sell/buy swap due that day. Majority of dealers expect it to take complete delivery.
While throughout the day, the rupee found support from inflows and a fall in the dollar index during the early European trading hours, a slight rise in crude oil prices limited rupee’s gains.
In the morning, the dollar index eased even after the minutes of the US Fed’s January meeting indicated that members of the rate-setting panel are in no hurry to cut interest rates. They also said that more evidence is needed before policy can be eased, adding that rate hikes are likely to be over. The dollar index went down further in the early European trading session, as the euro and pound strengthened post the release of the PMI data for February. At 1632 IST, the dollar index, which measures the strength in the greenback against a basket of six major currencies, was at 103.67 compared with 103.97 on Wednesday. It was at 104.06 on Tuesday.
Oil futures rose due to near-term supply tightness on account of geopolitical tensions in West Asia. This limited gains for the rupee. There are concerns about the Israel-Hamas war spreading to Lebanon. Hezbollah’s leader said on Wednesday that it would retaliate against Israel after the latter attacked and killed civilians in Lebanon. Crude oil prices also rose after Ukraine’s drone attacks on Russian refineries and oil storage facilities, that have curtailed Russian fuel exports. At 1635 IST, the April contract of Brent crude oil on the Intercontinental Exchange was at $83.21 a barrel, compared with $83.03 a bbl on Wednesday, and $82.34 a bbl on Tuesday.
Market participants also keep an eye out on the upcoming US data such as the US February flash manufacturing PMI and US unemployment insurance weekly claims report for the week ended Feb 17, due later today, which may also hint at the rate cut trajectory in the world’s largest economy.
FORWARDS
Premiums on one-year dollar/rupee forward contracts were slightly down today, tracking a rise in US Treasury yields, dealers said. Dealers said they are also eyeing what the Reserve Bank of India will do on Mar 11, regarding dollar-rupee sell/buy swap maturing on that date.
The premium on the one-year, exact-period dollar/rupee forward contract was 144.08 paise, down from 148.81 paise at Wednesday’s close. On an annualised basis, the premium was 1.73%, same as the previous day’s close.
Market participants see technical resistance for the one-year dollar/rupee forward premium at 1.90%.
OUTLOOK
On Friday, the rupee will take cues from movement in the dollar index, dealers said. The Indian unit will also track the movement in crude oil prices, they said.
During the day, the rupee is seen in a range of 82.80-83.30 a dollar, with key technical resistance pegged at 82.80 a dollar.
India Rupee – World FX: Euro up on higher-than-view services PMI
MUMBAI – The euro rose 0.4% against the dollar. The eurozone manufacturing Purchasing Managers’ Index in February was at 46.1, against the estimate of 47.0. However, the services Purchasing Managers’ Index was at 50.0, higher than the expectation of 48.8. The German manufacturing Purchasing Managers’ Index came in at 42.3 in February, lower than the forecast of 46.1. The services Purchasing Managers’ Index for the largest economy in the eurozone came in at 48.2, higher than the expectation of 48.0.
The pound sterling also rose 0.5% against the greenback, as market participants wait for the UK’s Purchasing Managers’ Index reading, due today. On Wednesday, Swati Dhingra, policymaker at the Bank of England, said demand prospects are weak and there may be downside risks to the economy owing to high interest rates.
The Australian dollar rose 0.5% against the greenback. The National Australia Bank chief executive officer said today that the country’s economy is well-placed to improve later this year, with inflation easing and interest rates having possibly reached their peak.
The Canadian dollar rose 0.4% against the dollar on the back of a rise in crude oil prices. Oil futures rose on near-term supply tightness on account of geopolitical tensions in West Asia. There are concerns about the spread of the Israel-Hamas war to Lebanon. Hezbollah’s leader said Wednesday that the organisation would retaliate against Israel after the latter attacked and killed civilians in Lebanon. Canada is a major oil exporter to the US.
The Japanese yen rose 0.1% against the US unit after comments from Bank of Japan Governor Kazuo Ueda on Thursday. Ueda said Japan’s central bank would guide its monetary policy in line with the rise in inflation seen in recent times. (Sourabh Kumar)
India Rupee: Premiums dn as US ylds up; eyes on US econ data
MUMBAI – Premiums on one-year dollar/rupee forward contracts were slightly down today, tracking a rise in US Treasury yields, dealers said.
The US Treasury yields inched up after the demand at the auction for the 20-year US Treasury note was weaker than anticipated. Further, minutes of the recent Federal Open Market Committee meeting showed caution amongst policymakers as members of the rate-setting panel are in no hurry to cut interest rates. They also said more evidence is needed before policy can be eased, adding that rate hikes are likely over. Premiums on forwards of a currency pair are reflective of the interest rate differential between the two countries.
“Most participants noted the risks of moving too quickly to ease the stance of policy and emphasised the importance of carefully assessing incoming data in judging whether inflation is moving down sustainably to 2%,” the minutes said.
Market participants also keep an eye out on the upcoming US data such as the US February flash manufacturing PMI and US unemployment insurance weekly claims report for the week ended Feb 17, due later today, which may also hint at the rate cut trajectory in the world’s largest economy. Fed fund futures traders are currently pricing a 51.1% chance of a rate cut in June in the US, according to the CME Fed Watch Tool.
Meanwhile, on the domestic front, traders await the Monetary Policy Committee’s minutes of February’s meeting, scheduled to be released at 1700 IST, dealers said. In its meeting, the domestic rate-setting panel kept the repo rate unchanged at 6.50%, and maintained a ‘withdrawal of accommodation’ stance.
Dealers said they are also eyeing what the Reserve Bank of India will do on Mar 11, regarding dollar-rupee sell/buy swap maturing on that date. “We have to see what happens, but I think they will take delivery completely, because otherwise they may have to meddle with forwards, which I am not sure if they want to do,” a dealer at a state-owned bank said.
At 1426 IST, the premium on the one-year, exact-period dollar/rupee forward contract was 144.29 paise, against 144.81 paise at Wednesday’s close. On an annualised basis, the premium was 1.74% against the previous day’s close of 1.73%. (Vaishali Tyagi)
India Rupee: Tad up; issue with Refinitiv FX platform resolved
MUMBAI – The rupee remained slightly higher against the dollar today as some banks sold the greenback for foreign fund inflows into the debt market, dealers said. The glitch faced by Refinitiv foreign exchange trading platform earlier was resolved and did not lead to a major problem, they said.
“It was not a major glitch, and not for a long time,” a dealer with a state-owned bank said. “The issue was resolved soon, and we did not face much of an issue.”
The Indian unit has moved in a very narrow range so far. Some dealers speculated that the Reserve Bank of India’s presence on either side of the rupee’s movement may be the reason for dull volume and movement. “Nothing major is happening in the market,” a dealer with a private bank said. “For the past few days, the entire day it (rupee) moves little, but towards the end of the day, they (RBI) try to close it (rupee) at certain pre-determined level.”
A fall in the dollar index gave some support to the Indian currency, dealers said. The dollar index eased today despite the minutes of the US Federal Reserve’s January meeting indicating that members of the rate-setting panel are in no hurry to cut interest rates. At 1226 IST, the dollar index, which measures the strength in the greenback against a basket of six major currencies, was at 103.83 compared with 103.97 on Wednesday. It was at 104.06 on Tuesday.
For the rest of the day, the rupee is seen in the range of 82.80-83.10 against the dollar, dealers said. They pegged the key technical resistance for the Indian currency at 82.80 a dollar. (Sourabh Kumar)
India Rupee: Slightly up; banks facing glitch in Refinitiv FX platform
NEW DELHI – The rupee remained slightly higher against the dollar as foreign banks sold dollars for foreign fund inflows into the debt market, dealers said. However, trading was hampered by a technical glitch in the Refinitiv foreign exchange trading platform, dealers said.
“There is an outage in the forex platform, volumes are being impacted due to this,” said a dealer with a state-owned bank. “We are expecting a muted session today.”
The rupee has traded in a range of only 5 paise so far today. A fall in the dollar index also provided support to the Indian unit, dealers said. The dollar index eased today despite the minutes of the US Federa Reserve’s January meeting indicating that members of the rate-setting panel are in no hurry to cut interest rates. At 1145 IST, the dollar index, which measures the strength in the greenback against a basket of six major currencies, was at 103.85 compared with 103.97 on Wednesday. It was at 104.06 on Tuesday.
For the rest of the day, the rupee is seen in the range of 82.80-83.10 against the dollar, dealers said. They pegged the key technical resistance for the Indian currency at 82.80 a dollar. (Pratiksha)
India Rupee – Asia FX: Mixed; investors assess Fed policy minutes
MUMBAI – Asian currencies were mixed against the dollar today as market participants assessed the minutes of the US Federal Reserve’s January meeting.
Minutes of the US Fed’s January meeting indicated that members of the rate-setting panel are in no hurry to cut interest rates. They also said that more evidence is needed before policy can be eased, adding that rate hikes are likely over. “Most participants noted the risks of moving too quickly to ease the stance of policy and emphasised the importance of carefully assessing incoming data in judging whether inflation is moving down sustainably to 2%,” the minutes said.
Fed fund futures traders are currently pricing a 52.2% chance of a rate cut in June in the US, according to the CME Fed Watch Tool. The dollar index eased slightly after the minutes of the US Fed’s January meeting. At 1053 IST, the dollar index, which measures the strength in the greenback against a basket of six major currencies, was at 103.89 compared with 103.97 on Wednesday. It was at 104.06 on Tuesday.
The South Korean won rose 0.3% against the greenback after the Bank of Korea held its key interest rate steady today at 3.5%, as expected by a Reuters poll, marking the ninth consecutive session where the central bank has held the rate.
The Indonesian rupiah rose 0.2% against the greenback, meanwhile the Taiwan dollar fell 0.1% against the US unit. The Malaysian ringgit, Thai baht and Philippines peso remained flat against the dollar. (Vaishali Tyagi)
India Rupee: Tad up as banks sell dollars for FX inflows, dollar index eases
MUMBAI – The rupee was slightly higher against the dollar today as a few banks sold dollars for foreign fund inflows, dealers said. The currency market has seen persistent dollar sales for foreign fund inflows in the Indian debt market this week.
“We are hearing some inflows, however, it (rupee) was largely steady because the market did not react much on US FOMC (Federal Open Market Committee) minutes as it was broadly on the similar lines as FOMC decision,” a dealer with a state-owned bank said.
The dollar index eased even after the minutes of the US Fed’s January meeting indicated that members of the rate-setting panel are in no hurry to cut interest rates. They also said that more evidence is needed before rates could be cut.
At 0923 IST, the dollar index, which measures the strength in the greenback against a basket of six major currencies, was at 103.96 compared with 103.97 on Wednesday. It was at 104.06 on Tuesday.
A rise in crude oil prices limited gains for the rupee, dealers said. Oil futures rose due to near-term supply tightness on account of geopolitical tensions in West Asia. There are concerns about the spread of the Israel-Hamas war to Lebanon. Hezbollah’s leader said on Wednesday that it would retaliate against Israel after the latter attacked and killed civilians in Lebanon. At 0932 IST, the April contract of Brent crude oil on the Intercontinental Exchange was at $83.13 a barrel, compared with $83.03 a bbl on Wednesday, and $82.34 a bbl on Tuesday.
After not finding many cues from the US FOMC meeting minutes, market participants have now kept their eyes on upcoming data such as US jobs and PMI data for February, both due later today.
For the rest of the day, the rupee is seen in the range of 82.80-83.20 against the dollar, dealers said. They pegged the key technical resistance for the Indian currency at 82.80 a dollar. (Sourabh Kumar)
India Rupee: Expected range for rupee – Feb 22
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 Ashish Shirke and Deepshikha Bhardwaj
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