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India Rupee Review: Ends lower on strength in dollar; FX inflows aid

Informist, Thursday, Nov 25, 2021

 

By Arushi Jain

 

MUMBAI – The rupee fell against the dollar today because the US unit remained elevated globally after members of the US Federal Open Market Committee hinted at faster-than-expected policy normalisation in the US, said dealers.

 

At 1555 IST, the dollar index, which measures the strength in the US currency against a basket of six major currencies, was at 96.68 against 96.88 on Wednesday. It was at 96.49 on Tuesday. The dollar index rose to as much as 96.94 on Wednesday.

 

Today, the rupee closed at 74.5100 a dollar after having moved within a range of only 11 paise. On Wednesday, the Indian currency had settled at 74.3950 a dollar at 1530 IST.

 

The minutes of the US Federal Reserve’s meeting, held earlier this month, indicated that the Fed was looking to accelerate the tapering of asset purchases and hike interest rates to curtail rising inflation, said dealers.

 

As a result, the dollar surged against major peers and some banks stepped in to place fresh bets in favour of the US currency, which weighed on emerging market assets including the rupee, dealers said.

 

The rupee fell to the day’s low of 74.5775 a dollar today.

 

However, the rupee found strong support at 74.5800 a dollar level and any further fall in the Indian unit was prevented as foreign banks stepped in to sell dollars for overseas investments into Indian companies raising funds, said dealers.

 

A US-based bank was said to have sold dollars in large quantum for overseas inflows into Dream Sports, according to dealers.

 

Dream Sports, owner of India’s biggest online gaming company Dream 11, has raised $840 mln from a number of foreign investors. The company is now valued at $8 bln.

 

Moreover, a sharp rise in domestic equity indices further lifted sentiment for the Indian currency, dealers said. The Nifty 50 and the Sensex ended nearly 0.7% and 0.8% higher, respectively. 

 

Dealers said that trade volumes were lower than usual and the currency pair traded within a narrow range because banks in the US were shut today on account of Thanksgiving Day.

 

Separately, prices of Brent crude oil were largely steady because investors remained on the sidelines as they assessed the effectiveness of the US and other major importers’ move to release strategic oil reserves to cool off prices.

 

All eyes are now on the Organization of the Petroleum Exporting Countries, Russia and its allies, which are due to meet next week to discuss oil demand and supply.

 

Investors are concerned that OPEC and its allies may not increase oil supply, citing expectations of lower demand due to renewed restrictions across European countries amid the spread of COVID-19, said dealers.

 

Rise in crude oil prices lead to inflation concerns globally and also raises India’s import bill, which weighs on the Indian currency.

 

At 1555 IST, the December contract of Brent crude on the Intercontinental Exchange was at $81.81 per barrel compared with $82.25 a bbl at close on Wednesday.

 

“If rupee breaks the 74.60/$1 level, chances are that it might go to 74.70-74.75/$1 too. Some banks have already taken long positions for dollar,” said a dealer with a state-owned bank.

 

1530 IST

1000 IST

HIGH

LOW  

PREVIOUS

(AT 1530 IST)

74.510074.545074.4700

74.5775

74.3950

 

FORWARDS

The premium on the dollar/rupee forwards contract ended a tad lower due to dollar sales by foreign banks for forward delivery on behalf of exporters, dealers said.

 

On an annualised basis, premium on the one-year, exact-period dollar/rupee contract was flat at 4.83%. The premium was at 359.53 paise compared with 361.05 paise on Wednesday.

 

OUTLOOK

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

 

“The solidity in the US dollar and cautiously trading crude oil prices would also add a base to the dollar/rupee pair around 74.30-74.50/$1 and a move towards 74.80/$1 is highly likely in the next few trading sessions,” said a dealer with a brokerage.

 

During the day, the Indian rupee is seen at 74.3000-74.7000 a dollar.

India Rupee – World FX: Euro up before ECB minutes; dollar takes pause

 

 AT 1600 ISTHIGHLOWPREVIOUSGBP/USD 1.33241.33531.33241.3327EUR/USD 1.12211.12291.11991.1201NZD/USD 0.68530.68940.68500.6871AUD/USD 0.71860.72090.71800.7195USD/JPY 115.3470115.4570115.2950115.4060USD/CAD 1.26661.26741.26411.2665EUR/JPY 129.4250129.5390129.2524129.2630CHF/USD 1.07131.07241.06981.0692EUR/CHF 1.04731.04831.04581.0461

 

NEW DELHI – The euro was up 0.2% against the US dollar, as investors are waiting for the minutes of the European Central Bank’s meeting held at the end of October, due later today.

 

Investors are also waiting for ECB President Christine Lagarde’s speech later in the day.

 

The euro was up despite data released by the Federal Statistics Office showing that the GDP of Germany, Europe’s largest economy, grew 1.7% in the Jul-Sep quarter, falling short of the flash estimate of 1.8% published last month.

 

The pound sterling was largely steady ahead of a speech by Bank of England Governor Andrew Bailey later today for cues on whether the central bank will raise interest rates in its December meeting.

 

The dollar rally took a breather in European trade, after hitting a 16-month high as the minutes from the last Federal Reserve meeting released Wednesday indicated a faster tapering pace.

 

At 1600 IST, the dollar index, which measures the strength of the US currency against a basket of six major currencies, was at 96.69 compared with 96.88 on Wednesday. It was at 96.49 on Tuesday.

 

The Australian dollar fell 0.1% against the greenback, after Australian Bureau of Statistics data released today showed that Australian business investment slipped 2.2% in Jul-Sep against market forecast of a 2% drop, as pandemic lockdowns shut many firms.

 

Investors are now waiting for the release of Australian retail sales data due later today.

 

The New Zealand dollar was down 0.3% against the dollar, languishing near its three-month low on Wednesday, after the country’s central bank raised its benchmark rate to 0.75%, against investor expectations of a larger hike. (Pratiksha)

India Rupee: Down; dollar firm as Fed minutes hint at faster taper

 

 

AT 1031 IST

1000 IST

HIGH

LOW

PREVIOUS

(AT 1530 IST)

Spot rupee per $1

74.5150

74.5450

74.4900

74.5500

74.3950

 

MUMBAI – The rupee was lower against the dollar today because the greenback remained firm after several officials of the US Federal Open Market Committee hinted at acceleration of taper of asset purchases and hiking interest rates, to curb rising inflation, said dealers.

 

The minutes of the US Federal Reserve’s meeting, held earlier this month, were released on Wednesday.

 

Dollar had surged after data released by the US Labor Department on Wednesday showed that weekly jobless claims in the US fell to their lowest level since 1969. New jobless claims dropped 71,000 to a seasonally adjusted 199,000 in the week ended Nov 20.

 

At 1031 IST, the dollar index, which measures the strength in the US currency against a basket of six major currencies, was at 96.75 against 96.88 on Wednesday. It was at 96.49 on Tuesday. The dollar index rose to as much as 96.94 on Wednesday.

 

Further, subdued domestic benchmark equity indices also weighed on the local unit, dealers said. At 1031 IST, the Nifty 50 and Sensex were down 0.1% each.

 

Dealers said that trade volumes were lower than usual because banks in the US were shut today on account of Thanksgiving Day.

 

With key technical support pegged at 74.70 a dollar, the Indian unit is seen in a range of 74.4000-74.7000 a dollar during the day. (Arushi Jain)

India Rupee – Asia FX: Most units dn as dlr firm on Fed’s taper view

 

NEW DELHI – Most Asian currencies were down against the dollar in early trade today after the US unit touched year’s high on Wednesday after comments from Federal Reserve policymakers were seen hawkish.

 

Minutes of the Nov 2-3 meeting showed several members of the US Federal Open Market Committee were in favour of accelerating the taper of asset purchases and hiking interest rates to check rising inflation. The minutes of the FOMC were released on Wednesday.

 

San Francisco Federal Reserve Bank President Mary Daly, in an interview, said she could see a case being made to speed up the Fed’s tapering of its bond purchases.

 

At 1015 IST, the dollar index, which measures the strength in the US currency against a basket of six major currencies, was at 96.74 against 96.88 on Wednesday. It was at 96.49 on Tuesday.

 

The greenback was also buoyed by strong US data that showed consumer spending increased more than expected in October, while price pressures also heated up during the month. Weekly jobless claims in the US fell to their lowest level since 1969. New claims dropped to 199,000 in the week ended Nov 20.

 

The Korean won was down nearly 0.3% in early Asian trade despite the country’s central bank increasing the policy rate by 25 basis points as expected. Lee Jae-myung, the ruling party’s presidential candidate, has warned of a potential collapse in the housing market as interest rates rise, with Seoul home prices roughly doubling over the past five years.

 

The Thai baht was up 0.1% against the dollar, rebounding after a sharp fall on Wednesday. It was supported by gains in the domestic equity market.

 

The Malaysian rinngit and the Philippine peso were both down, by 0.4% and 0.3%. (Shubham Rana)

India Rupee: Expected range for rupee – Nov 25

 

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 bank74.7074.40State-owned bank74.6574.40Private bank74.6574.35Private bank74.7074.40Foreign bank74.7074.35Foreign bank74.7574.45Brokerage firm74.6574.35Brokerage firm74.6574.37

(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.

 

Informist Media Tel +91 (11) 4220-1000

Send comments to [email protected]

 

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

Source: Cogencis

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