India Rupee Review: Up on FX inflows, surge in local equities

Informist, Tuesday, Oct 26, 2021

 

By Arushi Jain

 

MUMBAI – The rupee rose against the dollar today because foreign and private banks sold the US unit for overseas investments into Indian companies that plan to raise funds through initial public offerings in the coming days, dealers said.

 

The rupee strengthened also tracking gains in the local equity indices, said dealers. The Nifty 50 and the Sensex ended higher by nearly 0.8% and 0.6%, respectively.

 

After moving in a range of 22 paise, the Indian rupee closed at 74.9575 a dollar compared with 75.0775 at 1530 IST on Monday.

 

Various Indian companies such as Policybazaar, Paytm, Anand Rathi Wealth are set to launch their initial public offerings. The 6.3-bln-rupee offer of FSN E-Commerce Ventures Ltd, the parent company of fashion brand Nykaa, will open on Thursday and close on Monday.

 

Some dealers also said that traders stepped in to cover their existing bets placed in favour of the dollar after the rupee appreciated beyond the 75-a-dollar mark, which further strengthened the rupee.

 

Due to these persistent dollar sales, the Indian rupee touched the day’s high of 74.9500 a dollar.

 

However, during most part of the day, the Indian currency traded lower against the dollar because private and foreign banks purchased the dollars for outflows from Indian equities, said dealers.

 

“Had there not been such huge dollar buying for foreign outflows, in today’s market, rupee was seen touching 74.80/$1,” said a dealer with a state-owned bank.

 

A part of these dollar purchases was said to have been on behalf of oil marketing companies and other importers, who noted elevated Brent crude oil prices, said dealers.

 

Global investors expect crude oil prices to remain elevated driven by strong demand in the US, the world’s largest consumer of oil.

 

US investment bank Goldman Sachs said that a strong rebound in global oil demand could push Brent crude oil prices above its year-end forecast of $90 per barrel. The bank said it expected oil demand to shortly reach pre-COVID-19 levels of around 100 mln bpd as consumption in Asia rebounds after the second COVID-19 wave.

 

Earlier this month, the Organization of the Petroleum Exporting Countries and its allies said it would continue an existing deal under which it agreed to boost output by 400,000 bpd a month until at least April 2022.

 

At 1610 IST, the December contract of Brent crude on the Intercontinental Exchange was at $85.68 per bbl compared with $85.99 a bbl at close on Monday.

 

A large state-owned bank, two large private banks, a US-based bank and a UK-based bank were among the major buyers of the dollars today, dealers said.

 

As a result, the local unit saw the day’s low of 75.1650 a dollar.

 

Investors worldwide are now waiting for the outcome of meetings of major central banks, including the European Central Bank, Bank of Japan and Bank of Canada, scheduled this week.

 

Investors have started to also reassess their views on monetary policy normalisation and interest rates hikes by the US Federal Reserve amid fears of a slowdown in global economic recovery due to the recent outbreak of COVID-19 cases in China and Europe.

 

Traders are also looking forward to key growth data in the US, due later this week, for cues on economic recovery.

 

At 1610 IST, the dollar index, which measures strength of the US unit against a basket of six major currencies, was at 93.77 compared with 93.81 on Monday. It was at 93.61 on Friday.

 

“Considering the inflationary pressure, traders continue to weigh rate hikes across economies,” said a dealer with a foreign bank. “For the dollar/rupee, 74.80/$1 acts as a support while 75.25/$1 acts as a resistance.”

 

1530 IST

1000 IST

HIGH

LOW  

PREVIOUS

(AT 1530 IST)

74.957575.050074.9500

75.1650

75.0775

 

FORWARDS

The premium on dollar/rupee forwards contract ended higher because banks purchased dollars for forward delivery on behalf of importers, dealers said.

 

On an annualised basis, premium on the one-year, exact-period dollar/rupee contract was at 4.64%, against 4.59% on Monday. The premium was at 347.97 paise, compared with 344.57 paise on Monday.

 

OUTLOOK

On Wednesday, the rupee will take opening cues from movement in the dollar index and US bond yields.

 

The rupee may weaken as banks are expected to buy dollars for oil importers because of elevated Brent crude oil prices, said dealers.

 

However, banks are also expected to sell dollars for overseas investors ahead of upcoming initial public offerings of various Indian companies, which may provide some support to the rupee, dealers said.

 

The rupee is seen in a range of 74.8000-75.2000 a dollar on Wednesday.

India Rupee – World FX: Sterling rises on strong equities; Euro falls

 

 AT 1514 ISTHIGHLOWPREVIOUSGBP/USD 1.37921.37961.37571.3766EUR/USD 1.16151.16161.15941.1611NZD/USD 0.71660.71760.71530.7158AUD/USD 0.74980.75180.74850.7490USD/JPY 113.9610114.0800113.6990113.7000USD/CAD 1.23731.23941.23681.2380EUR/JPY 132.3400132.4000131.9680132.0200CHF/USD 1.08631.08781.08391.0877EUR/CHF 1.06901.07031.06751.0673

 

NEW DELHI – The pound sterling rose against the dollar today, tracking gains in the local and global equity markets. Global equities have rallied on the back of robust earnings in the US. 

Further, investors expecting the Bank of England to hike interest rates in their next week’s monetary policy meeting, also supported the sentiment for sterling. 

 

Meanwhile, the euro weakened against the dollar as investors expect the European Central Bank to continue its dovish policy. Its policy meeting is scheduled later this week. 

 

Commodity-linked currencies like the Australian and New Zealand dollars were both up nearly 0.1% against the dollar as crude oil prices remained elevated near multi-year highs.

 

At 1450 IST, the December contract of Brent crude on the Intercontinental Exchange was at $85.48 per barrel compared with $85.99 a bbl at close on Monday.

 

Dollar remained largely steady against other currencies and at 1457 IST, the dollar index, which measures the strength of the US currency against six other major units, was at 93.87, compared with 93.81 on Monday. It was at 93.61 on Friday.  (Shubham Rana)

India Rupee: Tad up tracking gains in equities; dlr strength weighs

 

 

AT 1025 IST

1000 IST

HIGH

LOW

PREVIOUS

(AT 1530 IST)

Spot rupee per $1

75.0475

75.0500

75.0275

75.0600

75.0775

 

MUMBAI – The rupee was a tad up against the dollar tracking gains in local and Asian benchmark equity indices which rose tracking an overnight rise in US stocks, said dealers. Equity markets in the US rose amid optimism ahead of the major corporate earnings lined up this week, they said.

 

At 1025 IST, The Nifty 50 and the Sensex were up over 0.3% and 0.2%, respectively. 

 

However, gains in the Indian currency were capped as the US unit gained amid fears that a fresh rise in COVID-19 cases in China and Europe may slow down the pace of the global economic recovery.

 

This led investors to reassess their views on the tightening of the ultra-accommodative monetary policy by the US Federal Reserve as a slower pace of the economic growth may not allow the US central bank to tighten its monetary policy aggressively, said dealers.

 

At 1025 IST, the dollar index, which measures strength in the US unit against a basket of six major currencies, was at 93.90 compared with 93.81 on Monday. It was at 93.61 on Friday.

 

Investors worldwide now await the outcome of major central banks’ meetings, including the European Central Bank, Bank of Japan and Bank of Canada, scheduled this week.

 

“The focus of the market is on the global interest rate outlook and the participants will continue to keep looking for cues for the beginning and also the pace of the rate hike cycle in various economies,” said a dealer with a brokerage.

 

The rupee had opened largely steady at 75.0500 a dollar today.

 

The Indian unit is expected to move in a range of 74.8000-75.2000 a dollar during the day. (Arushi Jain)

India Rupee – Asia FX: Mixed; investors reassess view on rate hikes

 

NEW DELHI – Asian currencies were mixed against the dollar today as investors began to reassess their views on monetary policy normalisation and interest rates hikes by the US Federal Reserve, as slower economic growth may not allow the central bank to tighten its policy aggressively.

 

Fed Chair Jerome Powell on Friday said he believed it was time to withdraw stimulus from the market, but the Fed can be patient with raising rates and allowing the labour market to heal.

 

Investors became wary about economic recovery due to an outbreak of fresh COVID-19 cases in China and Europe.

 

At 0950 IST, the dollar index, which measures strength of the US unit against a basket of six major currencies, was at 93.90 compared with 93.81 on Monday. It was at 93.61 on Friday.

 

The South Korean won and Taiwanese dollar rose 0.2% and 0.1%, respectively, tracking gains in the local equity markets. The gains were, however, limited due to elevated crude oil prices.

 

At 0950 IST, the December contract of Brent crude on the Intercontinental Exchange was at $86.14 per barrel, as against $85.99 a bbl at close on Monday, and $85.53 a bbl on Friday.  (Pratiksha)

India Rupee: Expected range for rupee – Oct 26

 

MUMBAI – The following are the expected support and resistance levels for the rupee, as forecast by leading banks and brokerages in an Informist poll:

 

 

SUPPORT

RESISTANCE

Big state-owned bank75.2074.80Private bank75.2074.80Foreign bank75.2574.85Brokerage firm75.2874.88Brokerage firm75.1574.90

 

(Arushi Jain)

 

End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Ashish Shirke

 

Cogencis news is now Informist. 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.

 

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Source: Cogencis