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India Rupee Review: Falls as bks cut short dlr bets, oil cos buy dlrs

Informist, Friday, Apr 22, 2022

 

By Pratiksha and Srijonee Bhattacharjee

 

NEW DELHI – The rupee fell sharply against the dollar today, snapping its two-day winning streak, on continuous purchases of the greenback by banks to cut bets placed in favour of the rupee, dealers said. 

The fall in the rupee was also because of greenback purchases for oil marketing companies, dealers said. 

 

The Indian unit settled 0.4% lower at 76.4825 a dollar today.

 

The rupee opened weaker at 76.2900 a dollar, as against 76.1450 a dollar on Thursday as the dollar index strengthened after US Federal Reserve Chair Jerome Powell’s hawkish remarks at a meeting of the International Monetary Fund, dealers said. 

 

The index rose after Powell confirmed that a 50-basis-point rate hike will be considered by the central bank’s Federal Open Market Committee at its meeting in May. He further said that it would be appropriate to be ‘moving a little more quickly’ with rate hikes. 

 

According to CME Group’s FedWatch Tool, Fed funds futures traders are pricing in a 50-basis-point rate hike at each of its next three meetings, with the central bank’s benchmark rate seen rising to 1.75-2.00% in July from 0.25-0.50% now.

 

At 1700 IST, the dollar index, which measures the value of the greenback against six major currencies was at 100.85, against 100.58 on Thursday. It was at 100.39 on Wednesday. 

 

After the market opened, the rupee traded in a narrow range of 76.25-76.30 a dollar for a duration of more than two hours. It was then pushed to the day’s high of 76.1950 a dollar on the back of greenback sales by exporters who wanted to take advantage of higher dollar/rupee levels of around 76.30-76.32 a dollar, according to dealers. 

 

However, the rupee was pushed to the 76.4200 a dollar level shortly after as some banks bought the greenback to cut bets placed in favour of the rupee earlier, dealers said. 

 

Traders had built short positions on the US unit, anticipating that the Indian currency would rise on the back of considerable foreign fund inflows for the initial public offering of state-owned Life Insurance Corp of India. 

 

However, media reports today said the government is planning to revise the amount to be raised through the LIC IPO to 300 bln rupees, about 40% lower than earlier estimated, by selling a stake of just over 5%. This led traders to cut existing long positions in favour of the rupee, dealers said. 

 

According to earlier reports, the government was looking to raise 500 bln rupees by selling as much as 7% of LIC.

 

The Indian unit was also weighed down by purchases of the greenback by state-owned banks on behalf of oil marketing companies, dealers said. 

 

Oil prices fell today, set for a drop of nearly 4% for the week, due to prospects of weaker global growth as COVID-19 lockdowns in China hurt demand, even as the European Union weighed a ban on Russian oil.

 

At 1700 IST, the June contract of Brent crude oil on the Intercontinental Exchange was at $106.98 a barrel, as against the previous close of $108.33 per bbl.

 

The rupee then moved in a narrow range of 76.35-76.40 a dollar for a duration of one hour, after which it was dragged to the day’s low of 76.4900 a dollar on the back of persistent dollar purchases by oil importers. 

 

According to dealers, persistent dollar sales by exporters prevented further losses in the local unit. 

 

“The rupee nearly touched the crucial support level of 76.50 (a dollar) today, as there was abundant buying (of dollars) in the market,” said a dealer with a state-owned bank. “There was also sporadic selling (of dollars) for exporters today throughout the day.”

 

Meanwhile, the dollar index jumped to a fresh two-year high in European trade today, which further weighed on the Indian unit, dealers said. 

 

The dollar index rose to 101.07 today, the strongest level since March 2020. 

 

A slump in domestic and Asian share indices also dampened the sentiment for the Indian currency, dealers said. The Nifty 50 and Sensex ended down at 1.3% and 1.2%, respectively.

 

 

AT 1530 IST

AT 0900 IST

HIGH

LOW

PREVIOUS

(AT 1530 IST)

Spot rupee per $1

76.482576.290076.195076.490076.1450

 

FORWARDS
Premiums on dollar/rupee forwards eased because comments from US Federal Reserve Chair Jerome Powell reinstated expectations that the central bank will raise rates aggressively to reign in inflation, dealers said.

 

Premium on the one-year, exact-period dollar/rupee contract was at 294.81 paise against 302.67 paise on Thursday. On an annualised basis, the premium was at 3.85%, against the previous close of 3.97%.

 

Premiums on dollar/rupee premiums took cues from US Federal Reserve Chair Jerome Powell’s hawkish remarks at a meeting of the International Monetary Fund, dealers said. 

 

Powell confirmed that the Federal Open Market Committee will consider a 50-basis-point rate hike at its meeting in May. He also said that it would be appropriate to be “moving a little more quickly” with rate hikes. 

 

This stoked expectation that the interest rate gap between India and the US may narrow in the coming days.

 

OUTLOOK

 

On Monday, the rupee will take the opening cues from overnight movement in the dollar index and Brent crude oil prices. 

 

Traders will also continue to monitor further developments in the Russia-Ukraine crisis. 

 

Dealers are of the view that the Reserve Bank of India may intervene and sell dollars to protect the rupee from depreciating below the crucial level of 76.50 a dollar.

 

Dealers have now pegged key technical resistance for the rupee at 76.10 a dollar and technical support at 76.50 a dollar.

 

During the day, the rupee is seen in the range of 76.0000-76.5000 a dollar.

India Rupee: Premiums fall on India-US rate gap view

 

 

AT 1425 IST

AT 1000 IST

HIGH

LOW

PREVIOUS

(AT 1530 IST)

Spot rupee per $1

76.4200      76.2900      

 

76.1950   

  

  

76.4600 

 

76.1450 

 

1-year dlr/rupee fwd (paise)295.81 298.81299.73294.39 302.67 

 

MUMBAI – Premiums on dollar/rupee forwards eased because comments from US Federal Reserve Chair Jerome Powell brought back expectations that the central bank will raise rates aggressively to reign in inflation, dealers said.

 

Premium on the one-year, exact-period dollar/rupee contract was at 295.81 paise against 302.67 paise on Thursday. On an annualised basis, the premium was at 3.88%, against the previous close of 3.97%.

 

Premiums on dollar/rupee premiums took cues from Powell’s hawkish remarks at a meeting of the International Monetary Fund, dealers said. 

 

Powell confirmed that the Federal Open Market Committee will consider a 50-basis-point rate hike at its meeting in May. He also said that it would be appropriate to be “moving a little more quickly” with rate hikes. 

 

This stoked expectation that the interest rate gap between India and the US may narrow in the coming days.  (Srijonee Bhattacharjee)

India Rupee: Falls more as banks cut short dlr bets on LIC IPO news

 

AT 1335 IST

AT 0900 IST

HIGH

LOW

PREVIOUS

(AT 1530 IST)

 

Spot rupee per $1

76.330076.290076.195076.422576.1450

 

NEW DELHI – The rupee fell further against the dollar as some banks bought the greenback to cut bets placed in favour of the rupee earlier, dealers said. 

 

According to dealers, traders had built short positions on the US dollar, anticipating that the Indian unit would rise on the back of considerable foreign fund inflows for the initial public offering of Life Insurance Corp of India. However, media reports today said the government might recalibrate the amount to be raised through the LIC IPO to 300 bln rupees, about 40% lower than earlier estimated. This led traders to cut existing long positions on the rupee, dealers said. 

 

According to earlier reports, the government was aiming to raise 500 bln rupees by selling as much as 7% of LIC.

 

The Indian unit was also weighed down by purchases of the greenback by banks on behalf of oil marketing companies, dealers said. 

 

Oil prices fell today due to prospects of weaker global growth as COVID-19 lockdowns in China hurt demand, even as the European Union weighed a ban on Russian oil.

 

At 1335 IST, the June contract of Brent crude oil on the Intercontinental Exchange was at $107.83 a barrel, against the previous close of $108.33 per bbl.

 

The rupee is seen at 76.2000-76.5000 a dollar for the rest of the day.  (Pratiksha)

 India Rupee: Falls as dollar index firm on Fed Powell’s hawkish view

 

 

AT 0930 IST

AT 0900 IST

HIGH

LOW

PREVIOUS

(AT 1530 IST)

Spot rupee per $1

76.275076.290076.270076.337576.1450

 

NEW DELHI – The rupee fell sharply against the greenback today as the dollar index strengthened after US Federal Reserve Chair Jerome Powell’s hawkish remarks at a meeting of the International Monetary Fund, dealers said. 

 

Powell confirmed that the Federal Open Market Committee will consider a 50-basis-point rate hike at its meeting in May. He also said that it would be appropriate to be “moving a little more quickly” with rate hikes. 

 

At 0930 IST, the dollar index, which measures the value of the greenback against six major currencies, was at 100.62, against 100.58 on Thursday. It was at 100.39 on Wednesday.

 

Meanwhile, domestic and other Asian share indices fell today tracking losses in US equities following Powell’s hawkish comments. This further weighed on the Indian unit, dealers said. At 0930 IST, the Nifty 50 and Sensex were down 0.9% and 0.8%, respectively.

 

“I think the rupee will limit itself in the range of 76.20-76.50 (a dollar) today,” said a dealer with a state-owned bank. “We might see some selling (of dollar) pressure from exporters at these levels.”

 

Dealers have now pegged a key technical support for the rupee at 76.50 a dollar.

 

The rupee is seen at 76.1000-76.5000 a dollar for the rest of the day.  (Pratiksha)

India Rupee – Asia FX: Most dn as dlr firm on Powell’s hawkish view

 

MUMBAI – Most Asian currencies were down in early trade today as the US dollar remained firm following hawkish comments by US Federal Reserve Chair Jerome Powell.

 

Powell on Thursday said that a 50-basis-point rate hike will be “on the table” at the Fed’s May 3-4 meeting.

 

“It is appropriate in my view to be moving a little more quickly,” Powell said, while participating in an International Monetary Fund panel.

 

Powell’s comments also pushed the US Treasury yields and the dollar index higher.

 

At 0830 IST, the dollar index, which measures the greenback’s value against six major currencies, was at 100.66 as against 100.58 on Thursday.

 

The South Korean won fell most among the Asian units, down 0.45%, followed by 0.38% drop in Malaysian ringgit. (Richard Fargose)

 

India Rupee: Expected range for rupee – Apr 22

 

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

 

Participants

SUPPORT

RESISTANCE

Big state-owned bank76.5076.10State-owned bank76.5576.15State-owned bank76.6076.20Foreign bank76.5076.10Private bank76.5576.15Private bank76.5376.15Brokerage firm76.4576.15Brokerage firm76.5576.15

(Pratiksha and Richard Fargose)                                         

 

End

 

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

 

Edited by Maheswaran Parameswaran

 

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. 2022. All rights reserved.

Source: Cogencis

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