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India Rupee Review: Up; RBI’s dollar sales pull back rupee from 80/$1

Informist, Thursday, Jul 21, 2022

 

By Pratiksha and Srijonee Bhattacharjee

 

NEW DELHI – The rupee moved above the psychologically significant 80-per-dollar mark and closed higher against the greenback today because of persistent dollar sales by the Reserve Bank of India, dealers said. 

 

After touching a low of 80.0575 a dollar during the day, the rupee settled at 79.9450 a dollar, as against 79.9900 a dollar at previous close. The unit kept itself in a narrow range of 8 paise for a majority of the trading session. 

 

The rupee started the day below the psychologically crucial level of 80-a-dollar because the US dollar index settled higher on Wednesday as investors braced themselves for the outcome of the European Central Bank’s monetary policy meeting today, dealers said. 

 

The euro was below a two-week high against the dollar ahead of the European Central Bank’s likely first interest rate increase since 2011 and the scheduled reopening of a key Russian gas pipeline later in the day.

 

The European Central Bank is expected to raise interest rates by 25 or 50 basis points to tame the record-high inflation.

 

At 1636 IST, the dollar index, which measures strength in the US currency against a basket of six major currencies, was at 107.09 compared with 107.08 on Wednesday. It was at 106.68 on Tuesday.

 

Two hours into the trade, the rupee pared its losses and rose to the 79.95-a-dollar level as some banks stepped in to sell the greenback on behalf of Reserve Bank of India, dealers said. 

 

However, the Indian unit was weighed down by persistent dollar purchases by oil and other importers throughout the day, dealers said. 

 

Dealers said importers bought dollars as they expect the Indian unit to fall further in the coming days.

 

Meanwhile, prices of crude oil fell over 5% today as demand concerns outweighed tight supply after US government data showed gasoline demand was low during the peak summer driving season.

 

At 1636 IST, the September contract of Brent crude oil on the Intercontinental Exchange was at $102.26 a bbl as against the previous close of $106.92 a bbl. 

 

However, volume in the currency market was lower than usual as traders were cautious and refrained from placing fresh bets ahead of the European Central Bank’s policy decision today and the US Federal Reserve’s policy meeting due next week, dealers said.

 

“Trade was dull today. The ECB policy decision will be a key driver for the market,” a dealer with a private bank said. 

 

As the central bank stepped up its greenback sales, the rupee ascended to the day’s high of 79.9100 a dollar, and went on to close at 79.9450 a dollar. 

 

Some dealers said banks also sold dollars on behalf of exporters, which further supported the local unit.

 

Dealers said RBI’s continuous dollar sales led exporters to believe that the central bank may not allow the domestic currency to fall below the psychologically crucial level so soon. 

 

“The RBI has been protecting the 80 level for many sessions now,” a dealer with a state-owned bank said. “Today, it came in as soon as the market opened. We’ll have to see how long these levels are sustained.”

 

 

AT 1530 IST

AT 0900 IST

HIGH

LOW

PREVIOUS

(AT 1530 IST)

Spot rupee per $1

79.945080.027579.910080.057579.9900

 

FORWARDS

 

Premiums on dollar/rupee forwards were flat because traders remained on the sidelines on caution ahead of the European Central Bank’s policy decision today and the US Federal Reserve’s policy meeting due next week, dealers said. 

 

The premium on the one-year dollar/rupee contract was 254.67 paise, against 254.00 paise on Wednesday.

 

OUTLOOK

On Friday, the rupee will take cues from overnight movement in the dollar index after the European Central Bank’s policy decision today, dealers said. 

 

The local unit will also take cues from movement in Brent crude oil prices, dealers said.

 

Dealers expect that RBI will continue to intervene through dollar sales to protect the rupee from depreciating beyond the psychologically crucial 80-per-dollar mark.

 

They see long-term support for the rupee at 80.50 a dollar.

 

During the day, the rupee is seen in a range of 79.80-80.15 a dollar.

India Rupee – World FX: Euro steady ahead of ECB policy outcome

 

 AT 1547 ISTHIGHLOWPREVIOUSGBP/USD 1.19511.20041.19211.1979EUR/USD 1.01871.02301.01661.0179NZD/USD 0.61960.62420.61850.6229AUD/USD 0.68730.69170.68590.6887USD/JPY 138.7050138.8770137.9820138.2450USD/CAD 1.29111.29271.28601.2883EUR/JPY 141.2990141.5950140.7210140.7160CHF/USD 1.02851.03161.02641.0293EUR/CHF 0.99000.99380.98870.9885

 

MUMBAI – The euro was steady against most major currencies as investors exercised caution ahead of the European Central Bank’s policy meeting later today, when the central bank is likely to hike interest rates for the first time in over a decade.

 

The European Central Bank is expected to hike raise interest rates by 25 or 50 points to tame the record-high inflation.

 

Market participants expect the common-bloc currency to weaken if the European Central Bank’s anti-fragmentation tool disappoints and if the rate is increased by only 25 bps.

 

The euro gained over 1.5% earlier this week after reports said that central bank policymakers may prefer a 50-bps rate hike today instead of the earlier expected 25-bps hike.

 

Meanwhile, Italy’s political turmoil overshadowed the resumption of gas supply to Europe from Russia.

 

Italian Prime Minister Mario Draghi resigned today after three coalition partners withdrew support, reports said.

 

The Nord Stream pipeline connecting Russia with Germany under the Baltic Sea resumed operation today after its annual maintenance, ending speculation about whether Russia may cut the gas flow to Europe in retaliation for sanctions on it. (Richard Fargose)

India Rupee:Off lows as RBI sells dollars; importers’ dlr buys weigh

 

 

AT 1422 IST

AT 0900 IST

HIGH

LOW

PREVIOUS

(AT 1530 IST)

Spot rupee per $1

79.960080.027579.915080.057579.9900

 

NEW DELHI – The rupee came off earlier lows against the greenback as some state-owned banks sold dollars, likely on behalf of the Reserve Bank of India, dealers said. 

 

Dealers said the central bank wanted to keep the Indian unit above the psychologically-crucial 80-per-dollar mark.

The Indian currency rose to the day’s high of 79.9150 a dollar today. 

 

However, some banks’ greenback purchases on behalf of importers weighed down the rupee, dealers said. 

 

For the rest of the day, the Indian unit is seen moving within a range of 79.8000-80.1000 a dollar. (Pratiksha)

India Rupee: Breaches 80/$1 as dollar index up Wed; RBI dollar sales support

 

 

AT 0930 IST

AT 0900 IST

HIGH

LOW

PREVIOUS

(AT 1530 IST)

Spot rupee per $1

80.017580.027579.980080.057579.9900

 

NEW DELHI – The rupee breached the psychologically-crucial 80-per-dollar mark today because the US dollar index settled higher on Wednesday as investors braced themselves for the outcome of the European Central Bank’s monetary policy meeting today, dealers said. 

 

The euro was below a two-week high against the dollar ahead of the European Central Bank’s likely first interest rate increase since 2011 and the scheduled reopening of a key Russian gas pipeline later in the day.

 

The European Central Bank is expected to raise interest rates by 25 or 50 basis points to tame the record-high inflation.

 

The dollar index, which measures the strength in the US currency against a basket of six major currencies fell slightly today and at 0930 IST, it was at 106.85 compared with 107.08 on Wednesday. It was at 106.68 on Tuesday.

 

However, losses in the Indian unit were restricted as some banks stepped in to sell dollars, likely on behalf of the Reserve Bank of India, dealers said. 

 

“I think the RBI’s strategy is to ensure slow and steady depreciation, it is not targetting any particular level now,” a dealer with a state-owned bank said. “We might see the rupee moving in a narrow range of 79.80-80.05 (a dollar) today.”

 

Dealers have pegged long-term technical support for the rupee at 80.50 a dollar.

 

For the rest of the day, the Indian unit is seen moving in the range of 79.8000-80.1500 a dollar. (Pratiksha)

India Rupee – Asia FX: Most units dn on caution ahead of key events

 

MUMBAI – Most Asian currencies were down against the US dollar as investors remained cautious ahead of key events later today. These include the outcome of the policy meeting of the European Central Bank and the resumption of gas supply from Russia to Europe through the Nord Stream-1 pipeline.

 

The European Central Bank is expected to hike interest rates by 25 or 50 basis points to tame record-high inflation.

 

Market participants expect the US dollar to strengthen if the bank’s anti-fragmentation tool disappoints and if the rate is increased by only 25 bps.

 

At 0837 IST, the dollar index was at 106.84 compared with 107.08 on Wednesday. It was at 106.68 on Tuesday.

 

On Wednesday, the European Union told its member states to reduce natural gas usage by 15% till March after President Vladimir Putin warned that Russian gas supplies could be reduced further and might even stop.

 

Most Asian currencies were down 0.1-0.2% against the greenback. The Indonesian rupiah fell 0.2%, the most among its Asian peers. (Richard Fargose)

India Rupee: Expected range for rupee – Jul 21

 

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 bank80.1079.85State-owned bank80.2079.85Foreign bank80.2579.85Private bank80.1579.90Private bank80.2179.87Brokerage firm80.1579.85Brokerage firm80.1579.90

 

(Pratiksha)

 

End

 

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

 

Edited by Deepshikha Bhardwaj

 

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

 

Cogencis news is now Informist news. 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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