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Monday, September 26, 2022

India Rupee Review: Down sharply on importers’ dlr buys, firm US dlr

Informist, Monday, Aug 8, 2022

 

By Pratiksha

 

NEW DELHI – Though the Reserve Bank of India supported the rupee through its sales of the greenback, the Indian unit ended sharply lower against the dollar today due to continuous purchases of the US currency by importers and broad-based strength in the greenback, dealers said. 

 

Dollar purchases on behalf of oil marketing companies also weighed on the domestic unit, dealers said. 

 

Today, the rupee closed 0.5% lower at 79.6600 a dollar. The unit moved in a range of 21 paise throughout the day. 

 

The Indian currency began the day 22 paise lower at 79.4500 a dollar because the US dollar had surged on Friday, dealers said. The US unit surged after stronger-than-expected US payrolls data indicated the US Federal Reserve might continue to aggressively increase interest rates in the near term, even as it subsided fears of a recession.

 

Data released on Friday showed non-farm payrolls in the US increased by 528,000 last month. The number for June was revised slightly higher to show 398,000 jobs created instead of the previously reported 372,000.

 

According to the CME FedWatch tool, market participants are now pricing in a 70% chance that the Fed will hike rates by 75 basis points in September.

 

Further, San Francisco Fed President Mary Daly suggested that a 50 basis-point rate increase wasn’t a done deal in the US central bank’s next policy meeting in September. She said the Fed was far from done in bringing down inflation, according to reports.

 

“Today’s rally in USD/INR is not being driven by risk-off trends but by pure Fed repricing. Such trends have greater durability as they do not reverse easily like risk off driven rallies are. Next major levels to watch will be 79.81 on spot and 80.00 on Aug futures. Bias is upward,” said Anindya Banerjee, vice-president, currency derivatives and interest rate derivatives at Kotak Securities Ltd.

 

At 1630 IST, the dollar index, which measures the strength in the US currency against a basket of six major currencies, was at 106.45 compared with 106.62 on Friday. It was at 105.69 on Thursday.

 

Two hours into trade, the rupee fell further to 79.58 a dollar, as some foreign banks purchased dollars on behalf of importers, dealers said. Dealers said importers purchased dollars on expectations of a further fall in the domestic unit. 

 

Moreover, banks purchased the greenback on behalf of oil marketing companies, which further weighed on the rupee, dealers said. 

 

Prices of crude oil stayed at their lowest levels since February due to worries that a recession could hit fuel demand.

 

At 1630 IST, the October contract of Brent crude oil on the Intercontinental Exchange was at $93.97 a barrel against the previous close of $94.92 a bbl. 

 

However, losses in the domestic currency were restricted as some banks sold dollars on behalf of the RBI, dealers said.

 

“I think the RBI was there in the market as soon as it opened,” a dealer with a private bank said. “After that, it tried protecting the 79.60 (a dollar) level.”

 

The rupee traded in a narrow range of 79.54-79.63 a dollar for the majority of the session. However, as importers stepped up their dollar purchases during the final 30 minutes of trade, the Indian unit fell to the day’s low of 79.6600 a dollar. 

 

Domestic equity indices stayed in the green for a majority of trade today, which supported sentiment for the Indian unit, dealers said. Today, the Nifty 50 and the Sensex ended 0.7% and 0.8% higher, respectively.

 

 

AT 1530 IST

AT 0900 IST

HIGH

LOW

PREVIOUS

(AT 1530 IST)

Spot rupee per $1

79.660079.450079.440079.660079.2300

 

FORWARDS

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

 

The premium on the one-year dollar/rupee contract was at 239.60 paise as against 245.79 paise at close on Friday. On an annualised basis, the premium was at 3.01% against the previous close of 3.10%.

 

The yield on the 10-year benchmark US Treasury note surged 15 basis points on Friday after data showed the world’s largest economy created more jobs than expected in July, strengthening expectations that the US Federal Reserve would continue to raise interest rates aggressively to tame inflation.

 

Premiums on forwards of a currency pair are reflective of the interest rate differential between the two countries. A rise in US interest rates would ensure that the spread with India rates narrows further.

 

Premiums on dollar/rupee forwards were down also because exporters sold dollars for forward delivery, noting the fall in the rupee today, dealers said.

 

Exporters and banks sold the greenback for forward delivery, owing to a rise in the dollar/rupee rate, which is a component of the premium received.

 

Market participants expect importers to start buying forward dollars noting the firm dollar globally.

 

OUTLOOK

Domestic financial markets will be closed on Tuesday for Muharram.

 

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

 

Traders are likely to remain cautious ahead of the release of the US consumer price data on Wednesday, dealers said.  

 

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.

 

During the day, the rupee is seen at 79.30-79.70 a dollar.

 India Rupee: Premiums slip tracking jump in US Treasury yields

 

 

AT 1458 IST

AT 0900 IST

HIGH

LOW

PREVIOUS

(AT 1530 IST)

Spot rupee per $1

79.590079.450079.440079.625079.23001-year dlr/rupee fwd (paise)240.10239.10241.10 239.10245.79

 

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

 

The premium on the one-year dollar/rupee contract was at 240.10 paise as against 245.79 paise at close on Friday. On an annualised basis, the premium was at 3.02% against the previous close of 3.10%.

 

Yield on the 10-year benchmark US Treasury note surged 15 basis points on Friday after data showed the world’s largest economy created more jobs than expected in July, strengthening expectations that the US Federal Reserve will continue to raise interest rates aggressively to tame inflation.

 

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.

 

Premiums on dollar/rupee forwards were down also because exporters sold dollars for forward delivery, noting the fall in the rupee today, dealers said.

 

Exporters and banks sold the greenback for forward delivery, owing to a rise in the dollar/rupee rate, which is a component of the premium received.

 

Market participants expect importers to start buying forward dollars noting the firm dollar globally.  (Richard Fargose)

India Rupee: Remains dn as importers buy dlrs; RBI dlr sales support

 

 

AT 1345 IST

AT 0900 IST

HIGH

LOW

PREVIOUS

(AT 1530 IST)

Spot rupee per $1

79.560079.450079.440079.625079.2300

 

NEW DELHI – The rupee remained sharply down against the greenback because banks persistently purchased dollars on behalf of importers, dealers said. 

 

Dealers said importers purchased dollars on expectation of a further fall in the domestic unit. 

 

Moreover, banks purchased the greenback on behalf of oil marketing companies, which further weighed on the rupee, dealers said. 

 

However, losses in the Indian currency were restricted as some banks sold dollars, likely on behalf of the Reserve Bank of India, dealers said. 

 

For the rest of the day, the Indian unit is seen at 79.4000-79.7000 a dollar.  (Pratiksha)

 

India Rupee – Asia FX: Most dn as dlr surges post strong US jobs data

 

MUMBAI – Most Asian currencies fell because the dollar gained globally as fears increased that the US Federal Reserve may continue with aggressive rate hikes to tackle elevated inflation after stronger-than-expected US payrolls data.

 

Hawkish comments by Fed members over the weekend also lifted the dollar.

 

San Francisco Fed President Mary Daly suggested that a 50-basis-point rate increase isn’t locked in for the Fed’s next policy meeting in September. The Fed is “far from done yet” in bringing down inflation, she said.

 

At 1050 IST, the dollar index, which measures the strength in the US currency against a basket of six major currencies, was at 106.56 compared with 106.62 on Friday. It was at 105.69 on Thursday.

 

The Philippine peso slipped 0.8%, most among Asian currencies, while the yuan was largely flat as China’s trade surplus in July came in at a record $101.3 bln.  (Richard Fargose)

India Rupee: Falls as dollar surges globally post strong US jobs data

 

 

AT 0940 IST

AT 0900 IST

HIGH

LOW

PREVIOUS

(AT 1530 IST)

Spot rupee per $1

79.477579.450079.440079.525079.2300

 

 

NEW DELHI – The rupee fell sharply against the greenback today as the US dollar surged globally on Friday, dealers said. 

 

The index surged after stronger-than-expected US payrolls data indicated that the US Federal Reserve may continue to aggressively raise interest rates in the near term, even as it subsided fears of a recession.

 

Data released on Friday showed US non-farm jobs rose by 528,000 last month. The number for June was revised slightly higher to show 398,000 jobs created instead of the previously reported 372,000.

 

At 0940 IST, the dollar index, which measures the strength in the US currency against a basket of six major currencies, was at 106.55 compared with 106.62 on Friday. It was at 105.69 on Thursday.

 

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

 

“Today’s rupee movement looks completely on the depreciating side,” a dealer with a state-owned bank said. “I think the only positive for the rupee will be if we see significant inflows hitting the market, other than that only RBI is a supporting factor.” 

 

For the rest of the day, the Indian unit is seen at 79.3000-79.7000 a dollar.  (Pratiksha)

 

India Rupee: Expected range for rupee – Aug 8

 

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

State-owned bank79.6079.15Foreign bank79.7579.10Private bank79.6579.30Brokerage firm79.7079.10Brokerage firm79.7079.10Brokerage firm79.6079.25

 

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 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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Source: Cogencis

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