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India Rupee Review: Down on dlr buys for FX outflows, defence payouts

Informist, Thursday, Oct 6, 2022

 

By Pratiksha

 

NEW DELHI – The rupee ended sharply lower against the greenback today due to continuous dollar purchases for foreign fund outflows from government securities and for the government’s defence-related payments, dealers said. 

 

The Indian unit was also weighed by dollar purchases on behalf of oil marketing companies, dealers said. 

 

Today, the rupee closed 0.4% lower at 81.8800 a dollar. 

 

The Indian unit started the day largely steady at 81.5100 a dollar, as against 81.5200 a dollar on Tuesday.

 

However, shortly afterwards it fell to 81.65 a dollar as some state-owned banks stepped in to purchase dollars on behalf of oil marketing companies, noting a rise in crude oil prices, dealers said. 

 

Prices of crude oil rose after the Organization of the Petroleum Exporting Countries and allies agreed to further tighten global oil supply with a deal to slash crude production by about 2 mln barrels per day.

 

At 1652 IST, the November contract of Brent crude oil on the Intercontinental Exchange was at $93.13 a bbl as against $93.37 a bbl on Wednesday. On Tuesday, the November contract had settled at $91.80 a bbl.

 

As oil importers stepped up their dollar purchases, the domestic unit was dragged to the 81.75 a dollar level, dealers said.

 

“Oil importers booked aggressively today looking at the rise in crude oil prices,” a dealer with a big state-owned bank said. “Traders are fearing the prices may go upto $100 (per bbl).”

 

Gradually, the Indian unit breached the immediate support of 81.80 a dollar and fell to the day’s low of 81.90 a dollar as major state-owned banks bought dollars, likely for the government’s defence-related payments, dealers said.

 

“There were defence payment related buying around the 81.70 level due to which we saw such sharp moves,” a dealer with a private bank said.

  

Moreover, foreign banks purchased dollars, likely for foreign fund outflows from government securities, which weighed on the domestic unit, dealers said. 

 

Dealers said the outflows were on account of JPMorgan not including India’s sovereign bonds in its bond index for emerging market economies in the latest review as investors cited operational hurdles which need to be resolved.

 

Meanwhile, the dollar index, which measures the greenback against six major currencies, strengthened further during European trade, as upbeat US data, hawkish policymaker comments, and the prospect of higher energy prices supported the greenback.

 

On Wednesday, the ADP National Employment Report showed private employment rose by 208,000 in the US in September, higher than an increase of 200,000 estimated by economists polled by Reuters, and against 185,000 jobs created in August, which was revised higher.

 

San Francisco Federal Reserve Bank President Mary Daly said on Wednesday that markets are working well, and the central bank is “resolute” on raising rates to bring down inflation.

 

At 1652 IST, the dollar index was at 111.33 compared with 110.07 on Wednesday. It was at 110.07 on Tuesday. On Tuesday, the index posted its biggest daily percentage decline since March 2020.

 

However, domestic share indices moved in the green throughout the day, which supported the sentiment for the Indian currency, dealers said. 

 

Today, both the Nifty 50 and the Sensex closed 0.3% higher. 

 

 AT 1530 ISTAT 0900 ISTHIGHLOWPREVIOUS(AT 1530 IST)Spot rupee per $181.880081.510081.490081.900081.5200

 

FORWARDS

Premiums on dollar/rupee one-year forward contract ended largely unchanged today. Earlier in the session, premiums were down tracking the surge in US Treasury yields, dealers said.
 

The premium on the one-year dollar/rupee contract was at 228.22 paise as against 229.66 paise at close on Tuesday. On an annualised basis, the premium was at 2.79%, unchanged against the previous close.

 

Yield on the 10-year benchmark US Treasury note surged 14 basis points on Wednesday after data indicated the US Federal Reserve would not move away from sharp monetary policy tightening.

 

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 volumes to improve after US non-farm payroll data on Friday. 

 

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

 

“The focus shifts to today’s US private payroll and tomorrow’s official job report, which will further drive the momentum in USD and thus will guide the rupee,” a brokerage firm said in a note. “Overall, we expect the USDINR pair to remain in a range of 81.20 to 81.90, before breaking towards 82.50 levels.”

 

Dealers expect the RBI to continue its intervention through dollar sales to protect the rupee from depreciating sharply against the greenback.

 

Dealers see immediate technical support for the Indian currency at 82.00 a dollar.
 
During the day, the rupee is seen at 81.60-82.30 a dollar.

 

India Rupee: Premiums a tad down tracking jump in US Treasury yields

 

 AT 1513 ISTAT 0900 ISTHIGHLOWPREVIOUS(AT 1530 IST)Spot rupee per $181.872581.510081.490081.900081.52001-year dlr/rupee fwd (paise)227.72227.22227.93226.12229.66

 

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

 

The premium on the one-year dollar/rupee contract was at 227.72 paise as against 229.66 paise at close on Tuesday. On an annualised basis, the premium was at 2.78% against the previous close of 2.79%.

 

Yield on the 10-year benchmark US Treasury note surged 14 basis points on Wednesday after data indicated the US Federal Reserve would not pivot from sharp monetary policy tightening.

 

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 fell slightly today tracking US yields, but overall volume and movement in forwards is very dull,” a dealer with state-owned bank said. “Despite sharp movement in US yields, there was hardly a 3 basis points’ move in 1-year forward premiums in the last 10 days.”

 

Market participants expect volumes to improve after US non-farm payroll data on Friday. (Richard Fargose)

India Rupee: Dn as major PSU bks buy dlrs likely for defence payouts

 

 AT 1454 ISTAT 0900 ISTHIGHLOWPREVIOUS(AT 1530 IST)Spot rupee per $181.880081.510081.490081.900081.5200

 

NEW DELHI – The rupee fell further against the greenback because major state-owned banks bought dollars, likely for the government’s defence-related payments, dealers said.

 

Moreover, foreign banks purchased dollars, likely for foreign fund outflows from government securities that further weighed on the Indian unit, dealers said. 

 

Dealers said the outflows were on account of JPMorgan not including India’s sovereign bonds in its bond index for emerging market economies in the latest review as investors cited operational hurdles which need to be resolved.

 

Dealers pegged immediate technical support for the rupee at 81.90 a dollar.

 

For the rest of the day, the Indian unit is seen moving in the range of 81.5000-81.9500 a dollar. (Pratiksha)

India Rupee: Falls more on dlr buys by oil cos, rise in dlr index

 

 AT 1310 ISTAT 0900 ISTHIGHLOWPREVIOUS(AT 1530 IST)Spot rupee per $181.720081.510081.490081.737581.5200

 

NEW DELHI – The rupee fell further against the greenback as state-owned banks persistently purchased dollars on behalf of oil marketing companies noting a rise in crude oil prices, dealers said. 

 

Prices of crude oil rose after the Organization of Petroleum Exporting Countries and allies agreed to further tighten global oil supply with a deal to slash crude production by about 2 mln barrels per day.

 

At 1310 IST, the November contract of Brent crude oil on the Intercontinental Exchange was at $93.43 a bbl as against $93.37 a bbl on Wednesday. On Tuesday, the November contract had settled at $91.80 a bbl.

 

Moreover, the dollar index, which measures the greenback against six major currencies, strengthened further in European trade, which also weighed on the Indian currency, dealers said.

 

At 1310 IST, the dollar index was at 110.99 compared with 110.07 on Wednesday.

 

Dealers have pegged immediate technical support for the rupee at 81.75 a dollar.

 

For the rest of the day, the Indian unit is seen moving in the range of 81.4000-81.8000 a dollar. (Pratiksha)

 

India Rupee: Falls as crude prices at 3-week high, dlr index rebounds

 

 AT 0945 ISTAT 0900 ISTHIGHLOWPREVIOUS(AT 1530 IST)Spot rupee per $181.632581.510081.490081.652581.5200

 

NEW DELHI – The rupee fell against the greenback today as prices of crude oil rose to a three-week high on Wednesday, dealers said. 

 

Prices of crude oil settled higher on Wednesday after the Organization of Petroleum Exporting Countries and allies agreed to further tighten global oil supply with a deal to slash crude production by about 2 mln barrels per day.

 

A rise in crude oil prices increases India’s import bill, which subsequently weighs on the Indian currency.

 

At 0945 IST, the November contract of Brent crude oil on the Intercontinental Exchange was at $93.46 a bbl as against $93.37 a bbl on Wednesday. On Tuesday, the November contract had settled at $91.80 a bbl.

 

Moreover, the dollar index, which measures the greenback against six major currencies, rebounded from its earlier weakness as upbeat US data, hawkish policymaker comments, and the prospect of higher energy prices supported the greenback. This also weighed on the Indian unit, dealers said. 

 

At 0945 IST, the dollar index was at 110.90 compared with 110.07 on Wednesday.

 

However, a rise in domestic equity indices restricted losses in the Indian unit, dealers said. At 0945 IST, both the Nifty 50 and the Sensex were 0.5% higher each. 

 

“The rupee may continue to trade in the 81.45-81.75 (a dollar) range with a depreciation bias,” a dealer with a state-owned bank said. 

 

Dealers have pegged immediate technical support for the rupee at 81.70 a dollar.

 

For the rest of the day, the Indian unit is seen moving in the range of 81.3000-81.8000 a dollar. (Pratiksha)

 

India Rupee: Expected range for rupee – Oct 6

 

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 bank81.7081.35Foreign bank81.7581.25Private bank81.8081.35Brokerage firm81.7081.35Brokerage firm81.9081.35

(Pratiksha)

 

End

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

 

Edited by Maheswaran Parameswaran

 

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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