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India Rupee Review: Falls sharply as oil cos, importers buy dollars

Informist, Wednesday, Aug 3, 2022

 

By Pratiksha

 

NEW DELHI – The rupee snapped a four-day rising streak against the dollar today due to continuous purchases of the greenback by oil marketing companies and importers, dealers said. 

 

The Indian currency closed 0.6% lower at 79.1600 a dollar.

 

The rupee had opened the day higher at 78.6700 a dollar but fell shortly afterwards to 78.7600 as the dollar was firm globally, dealers said.

 

The dollar rose following a surge in US Treasury yields as hawkish comments by several US Federal Reserve officials signalled aggressive interest rate hikes, dealers said.

 

On Tuesday, San Francisco Federal Reserve Bank President Mary Daly said the central bank is “nowhere near” being done in its fight against inflation, according to reports.

 

Chicago Fed President Charles Evans also said that he hoped the pace of rate hikes would be slower later in the year, but echoed Daly in saying it would depend on whether inflation, at 9.1% in June, begins to slow.

 

The greenback also rose on safe-haven appeal after Speaker of the US House of Representatives Nancy Pelosi’s arrival in Taiwan.

 

Investors are closely monitoring US-China relations as Pelosi is expected to meet Taiwanese officials despite objections from China.

 

At 1645 IST, the dollar index, which measures the strength of the US currency against a basket of six major currencies, was at 106.11 compared with 106.24 on Tuesday. It was at 105.45 on Monday.

 

During the day, the rupee fell to 78.91 a dollar as some foreign banks purchased dollars on behalf of oil marketing companies and importers, dealers said.

 

Prices of crude oil slipped ahead of the meeting of the Organization of the Petroleum Exporting Countries and allies later today.

 

At 1645 IST, the October contract of Brent crude oil on the Intercontinental Exchange was at $99.71 a barrel against the previous close of $100.03 a bbl.

 

As risk appetite was affected by rising tension between the US and China, banks continuously purchased dollars on behalf of importers on expectations of a further fall in the Indian currency, dealers said.

 

“As soon as the 78.80 level was breached, importers came in aggressively,” said a dealer with a state-owned bank. “The market saw a complete sentiment reversal today after yesterday’s panic selling by exporters.”

 

As importers stepped up their dollar purchases, the domestic unit breached the psychologically-crucial 79-per-dollar mark, and fell to the day’s low of 79.1825 a dollar, dealers said.

 

Rise in India’s merchandise trade deficit to a record high of $31.02 bln in July added to the pressure on the rupee. This is the third straight month in which the country’s trade deficit has hit a record high on account of high oil imports.

 

 

AT 1530 IST

AT 0900 IST

HIGH

LOW

PREVIOUS

(AT 1530 IST)

Spot rupee per $1

79.160078.670078.670079.1825 78.7125

 

FORWARDS

Premiums on one-year dollar/rupee forward contract settled lower tracking a surge in US Treasury yields, dealers said.

 

Premium on the contract was at 249.07 paise against 249.15 paise at close on Tuesday. On an annualised basis, the premium was at 3.13% against the previous close of 3.17%.

 

Yield on the 10-year benchmark US Treasury note surged 15 basis points on Tuesday as several Federal Reserve officials said they were committed to tackling soaring prices.

 

Premiums on forwards of a currency pair are reflective of the interest rate differential between the two countries. Rise in interest rates in the US would narrow the spread with rates in India further.

 

Importers also bought forward dollars noting a firm dollar globally after the surge in US Treasury yields and escalating tension between US and China, after which premiums recovered from intraday lows.

 

Dealers said the outcome of the Reserve Bank of India’s policy review on Friday would be the next crucial event for the market.

 

OUTLOOK

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

 

Investors are waiting for the outcome of the meeting of OPEC and its allies later today.

 

“The amount of appreciation the rupee saw yesterday was merely due to a panic reaction by exporters,” said a dealer with a state-owned bank. “We are back to the depreciating trend for rupee now.”

 

According to dealers, dollar purchases by importers are likely to weigh on the Indian currency.

 

Dealers have pegged the immediate key technical support for the rupee at 79.30 a dollar. During the day, the rupee is seen at 78.80-79.30 a dollar.

India Rupee – World FX: Euro up on better-than-expected PMI data

 

 AT 1613 ISTHIGHLOWPREVIOUSGBP/USD 1.21851.22081.21351.2162EUR/USD 1.01841.02001.01501.0162NZD/USD 0.62490.62710.62140.6252AUD/USD 0.69270.69400.68870.6918USD/JPY 133.3320133.9060132.2870133.1790USD/CAD 1.28591.28911.28471.2874EUR/JPY 135.7820135.9950134.8370135.3430CHF/USD 1.04231.04801.04131.0438EUR/CHF 0.97700.97830.97250.9730

 

MUMBAI – The euro rose 0.3% against the US dollar after eurozone Jul services purchasing managers’ index revised up to 51.2 from 50.6 reported initially.

 

Germany’s Jul final services PMI also came slightly higher at 49.7 as against 49.2 preliminary estimates.

 

However, the dollar remains firm against other major currencies following a surge in US Treasury yields as hawkish comments by several Federal Reserve officials led to chances of aggressive interest rate hikes.

 

The greenback also gained on safe haven appeal after US House Speaker Nancy Pelosi’s arrival in Taiwan.

 

At 1610 IST, the dollar index, which measures the strength of the US currency against a basket of six major currencies, was at 106.23 compared with 106.24 on Monday. It was at 105.45 on Monday. (Richard Fargose)

India Rupee: Premiums fall tracking surge in US Treasury yields

 

 

AT 1345 IST

AT 0900 IST

HIGH

LOW

PREVIOUS

(AT 1530 IST)

Spot rupee per $1

79.000078.670078.670079.0500 78.71251-year dlr/rupee fwd (paise)246.52245.52246.52 244.52249.15

 

MUMBAI – Premiums on dollar/rupee one-year forward contract eased tracking the surge in US Treasury yields, dealers said.

 

The premium on the one-year dollar/rupee contract was at 246.52 paise as against 249.15 paise at close on Tuesday. On an annualised basis, the premium was at 3.10% against the previous close of 3.17%.

 

Yield on the 10-year benchmark US Treasury note surged 15 basis points on Tuesday as several Federal Reserve officials said they were committed to tackling soaring prices.

 

Premiums on forwards of a currency pair are reflective of the interest rate differential between the two countries. Rise in US’ interest rates would ensure that the spread with India rates will narrow further.

 

Market participants expect importers to start buying forward dollars noting firm dollar globally after the surge in US Treasury yields and escalating geo-political tension between US-China.

 

“These are ideal levels for importers to cover forward dollars,” dealer with big state-owned bank said. ”Exporters did some panic selling in last two days, but, now it’s time for importers to cover dollars.”

 

Dealers said the outcome of the Monetary Policy Committee’s meeting on Friday would be the next crucial event for the market. (Richard Fargose)

India Rupee: Breaches 79/$1 as oil cos, importers buy dollars

 

 

AT 1329 IST

AT 0900 IST

HIGH

LOW

PREVIOUS

(AT 1530 IST)

Spot rupee per $1

79.037578.670078.670079.0500 78.7125

 

NEW DELHI – The rupee fell further and breached the 79-per-dollar mark against the greenback as foreign banks persistently purchased dollars on behalf of oil marketing companies, dealers said. 

 

Prices of crude oil slipped ahead of the meeting of the Organization of the Petroleum Exporting Countries and allies later today.

 

At 1329 IST, the October contract of Brent crude oil on the Intercontinental Exchange was at $99.66 a barrel as against the previous close of $100.03 a bbl. 

 

Noting dampened risk sentiment among investors, banks continuously purchased dollars on behalf of importers on expectations of a further fall in the Indian currency, dealers said. 

 

The risk appetite among investors dampened due to increased tensions between the US and China after US House Speaker Nancy Pelosi visited Taiwan amid objections by Beijing.

 

For the rest of the day, the Indian unit is seen at 78.7000-79.2000 a dollar.  (Pratiksha)

India Rupee – Asia FX: Most units down as US ylds surge, dollar firm

 

MUMBAI – Most Asian currencies were trading lower today as the US dollar was firm globally following a 15-basis-point surge in US Treasury yields on Tuesday as several Federal Reserve officials said they were committed to tackle soaring prices.

 

Asian units were also down due to risk aversion as tensions rose between US and China after US House Speaker Nancy Pelosi visited Taiwan amid objections from Beijing.

 

Hua Chunying, China’s assistant minister of foreign affairs, said on Tuesday that Pelosi’s visit to Taiwan was a “major political provocation”.

 

China has launched massive military drills around the island of Taiwan, including a long-range live fire drill in the Taiwan Straits and a live fire conventional missile drill to the east of the island.

 

However, gains in local equity indices also supported the Asian currencies. (Richard Fargose)

India Rupee: Falls as dollar firm globally, domestic shares down

 

 

AT 0937 IST

AT 0900 IST

HIGH

LOW

PREVIOUS

(AT 1530 IST)

Spot rupee per $1

78.730078.670078.670078.792578.7125

 

NEW DELHI – The rupee fell slightly against the greenback today as the US dollar was firm globally following a surge in US yields as hawkish comments from several US Federal Reserve officials indicated aggressive interest rate hikes, dealers said.

 

On Tuesday, San Francisco Federal Reserve Bank President Mary Daly said the central bank is “nowhere near” finished in its fight against inflation, according to reports.

 

The greenback also gained on safe-haven appeal after the arrival in Taiwan of US House Speaker Nancy Pelosi. Investors are closely monitoring US-China relations as Pelosi is expected to meet Taiwanese officials despite objections from China.

 

At 0939 IST, the dollar index, which measures strength in the US currency against a basket of six major currencies, was at 106.10 compared with 106.24 on Tuesday. It was at 105.45 on Monday.

 

Losses in domestic equity indices also weighed on the Indian unit, according to dealers. At 0938 IST, Nifty 50 and Sensex fell 0.2% and 0.1%, respectively.

 

“The trade should be less volatile today since traders will remain cautious ahead of the outcome of the RBI’s monetary policy meeting,” a dealer with a state-owned bank said. “The market has seen enough volatility in the past few sessions.”

 

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

 

For the rest of the day, the Indian unit is seen at 78.4000-79.9000 a dollar.  (Pratiksha)

 

India Rupee: Expected range for rupee – Aug 3

 

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 bank78.8578.45Big state-owned bank78.8078.40State-owned bank78.8078.35Foreign bank78.8078.25Private bank78.8878.50Brokerage firm78.8978.49Brokerage firm78.8078.40Brokerage firm78.8578.50

 

End

 

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

 

Edited by Ashish Shirke

 

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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