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India Rupee Review: Ends higher on inflows for IPOs; FOMC meet eyed

Informist, Tuesday, Nov 2, 2021

 

By Arushi Jain

 

MUMBAI – The rupee rose against the dollar today because of persistent sales of the greenback by foreign and state-owned banks for overseas investments into ongoing and upcoming initial public offerings of Indian companies, dealers said.

 

The Indian unit closed at 74.6775 a dollar today, as against 74.8650 at 1530 IST on Monday.

 

The share issue of PB Fintech, the parent of insurance aggregator platform Policybazaar and personal loan aggregator platform Paisabazaar, opened on Monday and will close on Wednesday.

 

The company plans to issue fresh shares worth 37.50 bln rupees and existing shareholders will sell shares of 22.68 bln rupees.

 

SJS Enterprises, Sigachi Industries, and Fino Payments Bank also raised funds through IPOs today. 

 

Dealers said that some banks also sold dollars ahead of the offer of One97 Technologies, which operates the unified payments interface Paytm, on Nov 8. The company plans to raise 183 bln rupees.

 

Due to these persistent dollar sales, the Indian unit touched the day’s high at 74.6600 a dollar.

 

However, gains in the local unit were limited as a fall in domestic equity indices dampened sentiment for the Indian currency. Both the Nifty 50 and the Sensex ended nearly 0.2% lower.

 

Dealers said that a large state-owned bank purchased dollars on behalf of oil marketing companies, noting elevated prices of Brent crude oil — near $85-per-barrel – which further weighed on the rupee.

 

At 1640 IST, the December contract of Brent crude oil on the Intercontinental Exchange was at $84.70 per bbl compared with $84.71 a bbl at close on Monday.

 

“Oil purchases is a daily phenomenon, however, expected rise in oil (prices) will fasten the (dollar) purchases…volatile oil prices are also increasing hedging-related oil bids,” said a dealer with a private bank.

 

Investors worldwide await the meeting of the Organization of the Petroleum Exporting Countries and its allies on Thursday.

 

The cartel is likely to continue with its plans of increasing output by just 400,000 bbl per day every month, at a time when global demand has shot up.

 

Further, the dollar also remained elevated globally ahead of key meetings by major central banks, which also weighed on the Indian unit, said dealers.

 

At 1640 IST, the dollar index, which measures the strength of the US currency against a basket of six major currencies, was at 93.91 compared with 93.88 on Monday. It was at 94.12 on Friday.

 

The rupee fell to the day’s low of 74.8600 a dollar today.

 

While the US Federal Reserve, at the outcome of its meeting on Wednesday, is expected to make announcements on its plans to begin tapering the massive $120 bln monthly bond-buying purchase programme, the Reserve Bank of Australia left the key policy rate unchanged earlier today, stating that inflation was too low to hike the interest rates right now. 

 

“Current expectations are that bond purchase will be reduced by about $15 bln per month (by the Fed); any number above this could spark a rally in dollar, while at the same time, if there is any delay in bond purchase reduction (which is less likely) dollar could lose ground and move back towards 93.50 levels,” said a dealer with a brokerage firm.

 

“Powell’s press conference post-meeting for his word on inflation expectations and timing of interest rate hikes would be closely monitored.”  

 

1530 IST

1000 IST

HIGH

LOW  

PREVIOUS

(AT 1530 IST)

74.677574.845074.6600

74.8600

74.8650

 

FORWARDS

The premium on dollar/rupee forwards contract ended higher because banks purchased the greenback for forward delivery on behalf of importers and likely for the Reserve Bank of India, dealers said.

 

On an annualised basis, premium on the one-year, exact-period dollar/rupee contract was at 4.74%, against 4.67% on Monday. The premium was at 354.89 paise compared with 353.35 paise on Monday.

 

OUTLOOK

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

 

Banks are expected to continue to sell dollars for overseas investors for investment in the ongoing and the upcoming IPOs of various Indian companies, and this may support the rupee, dealers said.

 

“The ideal strategy over the medium term would be to buy on dips as a stronger US dollar index, rising crude oil prices will keep pressurizing the trade deficit and inflation numbers,” said Amit Pabari, the managing director at CR Forex.

 

Dealers have pegged the immediate key technical resistance for the rupee at 74.50 a dollar and the support at 75.10 a dollar.

 

During the day, the rupee is seen in a range of 74.6000-75.1000 a dollar.

 India Rupee – World FX:Australian dlr falls as central bk holds rate

 

 AT 1550 ISTHIGHLOWPREVIOUSGBP/USD 1.36391.36711.36291.3665EUR/USD 1.15941.16141.15861.1605NZD/USD 0.71470.71880.71450.7180AUD/USD 0.74660.75320.74610.7521USD/JPY 113.5500114.1400113.4640114.0080USD/CAD 1.24061.24081.23701.2371EUR/JPY 131.6470132.3920131.4790132.2800CHF/USD 1.09611.10021.09551.0989EUR/CHF 1.05761.05841.05481.0552

 

NEW DELHI – The Australian dollar slumped today after the Reserve Bank of Australia refrained from hiking its key rate, stating that inflation wasn’t high enough to warrant a rate hike in the near-term.

 

While the central bank did drop its yield curve control policy and removed its previous projection that rates were unlikely to rise before 2024, Governor Philip Lowe called the market’s expectation of a rate hike as early as in 2022 “a complete overreaction” to inflation data.

 

The commodity-linked currency fell 0.8% today.

 

Meanwhile, the US dollar was steady ahead of the outcome of the US Federal Reserve’s policy meeting on Wednesday. The Fed is expected to announce the beginning of tapering its massive $120 bln monthly bond-buying programme. 

 

At 1637 IST, the dollar index, which measures the strength in the US unit against a basket of six major currencies, was at 93.91 compared with 93.88 on Monday. It was at 94.12 on Friday.

 

The pound sterling fell 0.1% as tensions between the UK and France escalated over a post-Brexit fishing rights issue. The Bank of England is set to meet on Thursday, with investors expecting the central bank to lift its interest rates for the first time in years due to strong inflationary pressures.  (Shubham Rana)

India Rupee: Rises on inflow for IPOs; central banks’ meetings eyed

 

 

AT 1020 IST

1000 IST

HIGH

LOW

PREVIOUS

(AT 1530 IST)

Spot rupee per $1

74.7925

74.8450

74.7850

74.8600

74.8650

MUMBAI – The rupee rose against the dollar today because foreign banks stepped in to sell dollars for overseas investments into Indian companies raising funds through initial public offerings, dealers said.

 

The IPO of PB Fintech, the parent of insurance aggregator platform Policybazaar and personal loan aggregator platform Paisabazaar, opened on Monday and will close on Wednesday.

 

The company will issue fresh shares worth 37.50 bln rupees, while existing shareholders will sell shares amounting to 22.68 bln rupees.

 

SJS Enterprises, Sigachi Industries, and Fino Payments Bank are also raising funds this week. 

 

A rise in domestic equity indices further supported the local unit, said dealers. At 1020 IST, both the Nifty 50 and the Sensex were up by nearly 0.1% each.

 

Investors worldwide now await central bank meetings in the US, the UK, and Australia this week amid concerns about elevated inflation, dealers said.

 

Officials at the US Federal Reserve are expected to announce plans to begin tapering the massive $120 bln monthly bond-buying purchase programme in the outcome of the Fed meeting on Wednesday.

 

While the central bank of Australia is set to announce its interest rate decision later today, the UK central bank is scheduled to meet on Thursday. 

 

The dollar remained elevated globally ahead of the key central banks’ meetings, said dealers.

 

At 1020 IST, the dollar index, which measures strength in the US currency against a basket of six major currencies, was at 93.85 compared with 93.88 on Monday. It was at 94.12 on Friday.

 

The Indian unit is expected to move in a range of 74.6000-75.0000 a dollar during the day.  (Arushi Jain)

India Rupee – Asia FX:Most slightly up ahead of key policy decisions

 

NEW DELHI – Most Asian currencies were slightly up in early trade today as investors awaited policy decisions from key central banks amid fears of rising inflation. A rise in equity markets also supported on the local currencies.

 

 

Investors are worried about different approaches of major central banks globally that have created uncertainty over the unwinding of substantial monetary policy support.

 

The central bank of Australia will announce its interest rate decision later in the day, while policy outcomes of the meetings of central banks in the US and the UK are scheduled for Wednesday and Thursday, respectively. 

 

 

The Indonesian rupiah was up 0.1% after the country authorised two COVID-19 vaccines. Indonesia became the first country to authorise Novavax vaccine. The country also approved the Sinovac Biotech Covid-19 VACCINE for children aged 6-11 years.

 

Bucking the trend, tourism-reliant Thai baht dropped 0.1% even as the country resumed travel for fully vaccinated tourists after months of restrictions. (Pratiksha)

India Rupee: Expected range for rupee – Nov 2

 

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 bank75.0074.70Foreign bank75.1074.65Foreign bank75.0074.70Private bank75.0074.75Private bank75.1574.75Brokerage firm74.9574.70Brokerage firm75.0574.75

(Arushi Jain)

 

End

 

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

 

Edited by Mainak Moitra

 

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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Send comments to [email protected]

 

© Informist Media Pvt. Ltd. 2021. All rights reserved.

Source: Cogencis

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