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India Rupee Review: Ends up; RBI’s dlr sales rescue from record lows

Informist, Thursday, Jun 23, 2022

 

By Pratiksha and Srijonee Bhattacharjee

 

NEW DELHI – Even though dollar purchases by foreign portfolio investors and oil marketing companies weighed on the rupee throughout the day, it ended higher against the dollar due to persistent sales of the greenback by the Reserve Bank of India, dealers said. 

 

Snapping a two-day streak of record closing lows, the rupee settled at 78.3000 a dollar.

 

The Indian currency opened higher at 78.2600 a dollar, against Wednesday’s closing of 78.3850 a dollar, because India’s current account deficit narrowed to $13.4 bln in Jan-Mar from $22.2 bln a quarter ago, dealers said.

 

India’s current account deficit narrowed on account of moderation in the trade deficit and lower net outgo of primary income.

 

The local unit then traded in a narrow range of 78.24-78.27 a dollar for almost four hours, after which it moved to 78.3400 a dollar as overseas banks persistently purchased dollars on behalf of foreign portfolio investors, dealers said. 

 

The rupee was dragged to the day’s low of 78.3750 a dollar as state-owned banks also continuously bought the US unit on behalf of oil marketing companies.

 

Prices of crude oil fell as investors reassessed the risks of recession and the impact of interest rate hikes in major economies on fuel demand. At 1630 IST, the August contract of Brent crude oil on the Intercontinental Exchange was at $111.27 a barrel, against the previous close of $111.74 a bbl. 

 

However, the Indian currency didn’t move past the day’s low, as some state-owned banks stepped in to sell the greenback, likely on behalf of the Reserve Bank of India, dealers said.

 

According to dealers, the central bank wanted to prevent the rupee from falling beyond the psychologically crucial support of 78.50 a dollar. The RBI was said to have sold the dollar in spurts but in a significant amount at around 78.29 and 79.36 a dollar. 

 

“It is tough to understand the RBI’s strategy now. However, I think today it tried to stop the rupee from touching a new record low,” a dealer with a state-owned bank said. “There was a lot of demand (for dollars) in the market as usual”

 

Gains in domestic equity indices supported sentiment for the Indian unit, dealers said. Today, both the Nifty 50 and the Sensex ended 0.9% higher.

 

Meanwhile, the dollar index recovered sharply in European trade, which weighed on the Indian currency, dealers said. The index had eased in Asian trade due to fear that the US economy could slip into recession, after US Federal Reserve Chairman Jerome Powell said higher rates were painful, but this was the central bank’s tool to bring down inflation.

 

“At the Fed, we understand the hardship high inflation is causing. We are strongly committed to bringing inflation back down, and we are moving expeditiously to do so,” the Fed chief said to the Senate Banking Committee.

 

At 1630 IST, the dollar index, which measures the strength of the US currency against a basket of six major currencies, was at 104.60 compared with 104.20 on Wednesday. It was at 104.44 on Tuesday.

 

During the final 10 minutes of trade, the rupee pared almost 7 paise of losses, as the central bank stepped up its dollar sales, and went on to close at 78.3000 a dollar. 

 

 

AT 1530 IST

AT 0900 IST

HIGH

LOW

PREVIOUS

(AT 1530 IST)

Spot rupee per $1

78.300078.260078.220078.375078.3850

 

FORWARDS

Premiums on dollar/rupee forwards rose because some banks placed long bets on dollars for forward delivery to take advantage of the sharp fall in premiums on Wednesday. 

 

The premium on the one-year, exact-period dollar/rupee contract was at 235.50 paise as against 220.54 paise Wednesday. It fell to a low of 219.15 paise on Wednesday. On an annualised basis, the premium was at 3.00% as against 2.80% at previous close. It slid much below the 3% mark to a low of 2.78% on Wednesday. 

 

Premiums fell sharply on Wednesday because the RBI sold dollars for forward delivery to advance delivery of outstanding forward long dollars bets and prop up its dollar reserves.

 

Further, a growing shortage of dollars in the market weighed on premiums. High prices of dollars offshore prompted market participants to convert rupees for dollars immediately and then selling dollars for delivery the next day, bringing rates on very near-term swap points lower, dealers said.  

 

This pressure eased today, allowing premiums to rise. 

 

OUTLOOK

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

 

“Until USDINR remains below 78.00 (a dollar) mark sustainably, upside risk is intact on USDINR with an immediate resistance of around 78.50 levels,” a brokerage firm said in a note.

 

Dealers are of the view that the RBI will continue to intervene through dollar sales to protect the rupee from depreciating sharply against the dollar.

 

Dealers have pegged immediate key technical support for the rupee at 78.50 a dollar.

 

During the day, the rupee is seen within the range of 78.00-78.50 a dollar.

 India Rupee: Off highs as bks persistently buy dlrs for FPIs, oil cos

 

 

AT 1358 IST

AT 0900 IST

HIGH

LOW

PREVIOUS

(AT 1530 IST)

Spot rupee per $1

78.342578.260078.220078.370078.3850

 

NEW DELHI – The rupee came off earlier highs against the greenback as some overseas banks persistently purchased dollars on behalf of foreign portfolio investors, dealers said. 

 

Dealers said state-owned banks also continuously bought the US unit on behalf of oil marketing companies, which also weighed on the Indian unit.

 

Prices of crude oil fell as investors reassessed the risks of recession and the impact of interest rate hikes in major economies on fuel demand.

 

At 1358 IST, the August contract of Brent crude oil on the Intercontinental Exchange was at $109.98 a barrel against the previous close of $111.74 a bbl. 

 

However, the Indian currency didn’t move beyond the day’s low of 78.3700 a dollar, as some banks stepped in to sell the greenback, likely on behalf of the Reserve Bank of India, dealers said.

 

According to dealers, the central bank wanted to prevent the rupee from falling beyond the psychologically crucial support of 78.50 a dollar. 

 

Dealers have pegged immediate technical support for the rupee at 78.50 a dollar.

 

For the rest of the day, the Indian unit is seen moving in the range of 77.9500-78.4500 a dollar.  (Pratiksha)

 

India Rupee – Asia FX: Mixed; global recession concerns loom large

 

NEW DELHI – Asian currencies moved on a mixed note today as investors remained concerned over a possible global recession.

 

Investors are assessing the risk of central banks pushing the world economy into recession as they attempt to curb inflation with interest rate hikes.

 

On Wednesday, US Federal Reserve Chairman Jerome Powell told Congressional lawmakers that the US central bank is not trying to engineer a recession, but is fully committed to bringing prices under control even at the risk of an economic downturn.

 

“At the Fed, we understand the hardship high inflation is causing. We are strongly committed to bringing inflation down, and we are moving expeditiously to do so,” Powell said in his remarks to the Senate Banking Committee.

 

The Indonesian rupiah rose 0.2% against the greenback ahead of Bank Indonesia’s monetary policy outcome later today. The central bank is expected to provide clarity on the timing of its interest-rate liftoff.

 

The Philippines peso was steady against the dollar ahead of Bangko Sentral ng Pilipinas’ monetary policy decision later today, where the central bank is again expected to go for tightening to tame inflation.  (Pratiksha)

India Rupee: Rises as Jan-Mar CAD narrows, dollar index eases

 

 

AT 0938 IST

AT 0900 IST

HIGH

LOW

PREVIOUS

(AT 1530 IST)

Spot rupee per $1

78.237578.260078.230078.280078.3850

 

NEW DELHI – The rupee rose against the dollar today because India’s current account deficit narrowed in Jan-Mar to $13.4 bln from $22.2 bln a quarter ago, dealers said.

 

India’s current account deficit narrowed on account of a moderation in the trade deficit and lower net outgo of primary income.

 

Moreover, the dollar index eased on worries that the US economy could slip into recession, after US Federal Reserve Chairman Jerome Powell said higher rates are painful but it is the central bank’s tool to bring down the inflation. This also provided support to the Indian unit, dealers said. 

 

At 0938 IST, the dollar index, which measures the strength of the US currency against a basket of six major currencies, was at 104.12 compared with 104.20 on Wednesday. It was at 104.44 on Tuesday.

 

“Even though all the immediate factors look in favour of the rupee today, we still have a lot of demand (for dollars) in the market,” a dealer with a state-owned bank said. “The 78.50 (a dollar) level will be watched.”

 

Today, the Indian currency opened at a record opening low of 78.2600 a dollar. Dealers have pegged immediate technical support for the rupee at 78.50 a dollar.

 

For the rest of the day, the Indian unit is seen moving in the range of 77.9500-78.4500 a dollar.  (Pratiksha)

India Rupee: Expected range for rupee – Jun 23

 

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

Big state-owned bank78.4578.00Foreign bank78.4577.95Private bank78.4878.08Private bank78.4078.00Brokerage firm78.5078.00Brokerage firm78.4078.10

(Pratiksha and Richard Fargose)

 

End

 

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

 

Edited by Avishek Dutta

 

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

 

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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