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India Rupee Review: At all-time closing low as oil cos, FIIs buy dlrs

Informist, Thursday, Jun 16, 2022

 

By Pratiksha and Srijonee Bhattacharjee

 

NEW DELHI – After trading in a very tight range of 8 paise throughout the day, the rupee closed at a record closing low for the second consecutive session due to dollar purchases by oil marketing companies and foreign institutional investors, dealers said. 

 

The Indian unit settled at 78.0700 a dollar against 78.0650 a dollar on Wednesday. 

 

The rupee opened slightly higher at 78.0300 a dollar as the US currency fell against other major currencies after the US Federal Reserve raised interest rates by 75 basis points, in line with market expectations, dealers said. 

 

The US Federal Open Market Committee raised the federal funds rate target range by 75 basis points to 1.50-1.75%, and Fed officials said they expect to hike rates by 175 bps in the rest of the calendar year.

 

The widely-expected move by the central bank comes as a recent report from the US Labor Department showed that US consumer price inflation rose to a four-decade high in May.

 

The dollar index, which measures the strength of the US currency against a basket of six major currencies, rose to 105.79 immediately after the Fed decision, its highest since December 2002. 

 

However, later on, the index eased and at 1635 IST, it was at 105.08 compared with 105.16 on Wednesday. It was at 105.52 on Tuesday.

 

The rupee gradually touched the day’s low of 78.0950 a dollar as some banks purchased dollars on behalf of oil marketing companies, dealers said.

 

Prices of crude oil fell today, as US crude inventories climbed for a second straight week and as markets worried about a fall in demand after the Fed announced its largest interest-rate hike in almost 30 years.

 

US crude production, which has been largely stagnant over the past few months, edged up 100,000 barrels per day last week to 12 mln bpd, its highest level since April 2020, data from the Energy Information Administration showed.

 

At 1635 IST, the August contract of Brent crude oil on the Intercontinental Exchange was at $117.19 a barrel against the previous close of $118.51 a bbl. 

 

Moreover, some banks purchased dollars for foreign institutional investors, which further weighed on the Indian unit, dealers said. 

 

Some banks were also said to have sold dollars on behalf of exporters, which restricted the domestic unit from falling beyond the 78.10 a dollar level, dealers said.

 

“The overall market sentiment was of buying (of dollars) on dips but since the Fed policy turned out to be a non-event for the market, the trade was very dull today,” a dealer with a state-owned bank said. 

 

Meanwhile, dealers said trade volumes in the currency market remained lacklustre today as traders stayed on the sidelines and avoided placing fresh bets due to a lack of significant cues. 

 

A slump in domestic equity indices also dampened sentiment for the rupee. The Nifty 50 and the Sensex ended 2.1% and 2.0% lower, respectively.

 

The rupee traded in a narrow range of 78.04-78.08 a dollar for a majority of the trade and closed at 78.0700 a dollar.

 

 

AT 1530 IST

AT 0900 IST

HIGH

LOW

PREVIOUS

(AT 1530 IST)

Spot rupee per $1

78.070078.030078.012578.095078.0650

 

FORWARDS

Premiums in dollar/rupee forwards were largely unchanged from before the US Federal Reserve’s policy announcement as it was along expected lines, dealers said. 

 

The premium on the one-year, exact-period dollar/rupee contract was at 253.64 paise, against 259.24 paise on Wednesday. On an annualised basis, the premium was 3.25%, against the previous close of 3.30%.

 

OUTLOOK

On Friday, the rupee will take cues from overnight movement in the dollar index and Brent crude oil prices, said dealers.

 

“I think the rupee should trade in a narrow range of 77.90-78.15 (a dollar) (on Friday) too, since the market will wait for fresh triggers,” a dealer with a private bank said.   

 

Dealers see immediate key technical support for the rupee at 78.30 a dollar and a long-term support at 78.50 a dollar. 

 

During the day, the rupee is seen in the range of 77.85-78.40 a dollar.

India Rupee: Premiums largely stable as Fed policy offers no surprises

 

 

AT 1510 IST

AT 0900 IST

HIGH

LOW

PREVIOUS

(AT 1530 IST)

Spot rupee per $1

78.0475    78.0300    

 

 

78.0125 

 

  

  

78.0950 

 

78.0650

 

1-year dlr/rupee fwd (paise)256.45259.64259.64252.36259.24

 

MUMBAI – Premiums in dollar/rupee forwards were largely unchanged from before the US Federal Reserve’s policy announcement as it was along expected lines, dealers said. 

 

The premium on the one-year, exact-period dollar/rupee contract was at 256.45 paise, against 259.24 paise on Wednesday. On an annualised basis, the premium was 3.29%, against the previous close of 3.30%.

 

After the US retail inflation print for May came in at a 40-year high of 8.6% on Friday, market participants had braced themselves for aggressive rate hikes by the Fed in the coming months. A 75 basis-point-rate hike at the June policy had been factored in by the market.    

 

After delivering a 75-bps-hike, members of the US Fed also pencilled in 175 bps of rate hikes in its four remaining meetings this year, with the median forecast for the federal funds rate rising to 3.25-3.50%, according to projections released along with the policy statement.  (Srijonee Bhattacharjee)

India Rupee: Remains in tight range; dlr buys by oil cos, FIIs weigh

 

 

AT 1350 IST

AT 0900 IST

HIGH

LOW

PREVIOUS

(AT 1530 IST)

Spot rupee per $1

78.085078.030078.012578.095078.0650

 

NEW DELHI – The rupee remained in a narrow range against the dollar today as traders stayed on the sidelines and avoided placing fresh bets due to lack of significant cues, dealers said.  

 

The Indian currency has moved in a range of 8 paise so far today.

 

Earlier today, the rupee touched the day’s low of 78.0950 a dollar as some banks purchased dollars on behalf of oil marketing companies, dealers said.

 

Moreover, some banks also purchased dollars for foreign institutional investors, which further weighed on the Indian unit, dealers said. 

 

For the rest of the day, the Indian unit is seen at 77.8500-78.2000 a dollar.  (Pratiksha)

India Rupee – Asia FX: Mixed after Fed hikes interest rates by 75 bps

 

NEW DELHI – Most Asian currencies moved on a mixed note today after the US Federal Reserve raised interest rates by 75 basis points. 

 

The US Federal Open Market Committee raised the federal funds rate target range by 75 basis points to 1.50-1.75%, in line with the market expectation, and Fed officials said they expect to hike rates by 175 bps in the rest of the calendar year.

 

The central bank move comes amid a recent report from the Labor Department showed that the US consumer price inflation rose to a four-decade high in May.

 

The Taiwan dollar fell 0.3% against the greenback ahead of the country’s monetary policy decision later today. The Central Bank of the Republic of China, Taiwan, is set to implement back-to-back interest-rate increases for the first time since 2011. 

 

The South Korean won was up 0.2% against the dollar, while the Thai baht was down 0.5% against the greenback. (Pratiksha)

India Rupee: Rises as dlr falls after FOMC outcome on expected lines

 

 

AT 0940 IST

AT 0900 IST

HIGH

LOW

PREVIOUS

(AT 1530 IST)

Spot rupee per $1

78.027578.030078.012578.080078.0650

 

NEW DELHI – The rupee rose slightly against the greenback today as the dollar fell against other major currencies after the US Federal Reserve raised interest rates by 75 basis points, in line with market expectations, dealers said. 

 

The US Federal Open Market Committee raised the federal funds rate target range by 75 basis points to 1.50-1.75%, in line with the market’s expectation, and Fed officials said they expect to hike rates by 175 bps in the rest of the calendar year.

 

The widely expected move by the central bank comes as a recent report from the Labor Department showed that US consumer price inflation rose to a four-decade high in May.

 

Meanwhile, domestic and Asian share indices rose today tracking overnight gains on the Wall Street, which also provide support to the Indian unit, dealers said. 

 

At 0940 IST, the Nifty 50 and Sensex were up 1.0% and 1.1%, respectively.

 

“I think since the FOMC outcome was discounted by the market, traders will look for fresh triggers now,” a dealer with a state-owned bank said. “The rupee should be in a narrow range of 77.90-78.10 (a dollar) today.”

 

Dealers have pegged technical support for the rupee at 78.30 a dollar.

 

For the rest of the day, the Indian unit is expected to move in the range of 77.8500-78.3000 a dollar.  (Pratiksha)

 

India Rupee: Expected range for rupee – Jun 16

 

NEW DELHI – 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

Foreign bank78.25    77.75Private bank78.2077.85Brokerage firm78.1577.85Brokerage firm78.2577.90Brokerage firm78.2677.86

 

End

 

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

 

Edited by Shirsha Thakur 

 

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. 2022. All rights reserved.

Source: Cogencis

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