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India Rupee Review: At record closing low on firm dlr, long dlr bets

Informist, Friday, Oct 7, 2022

 

By Pratiksha

 

NEW DELHI – The rupee ended at a record closing low against the US dollar today because of a rise in the greenback, as well as purchases of the US currency for long dollar bets and importers, dealers said.

 

Today, the rupee closed 0.5% lower at 82.3200 a dollar. It was the second worst performing currency among its Asian peers today, after the South Korean won.

 

The Indian currency started the day at an unprecedented low of 82.2000 a dollar, a gap-down of 32 paise, as the US dollar settled sharply higher on Thursday, dealers said. On Thursday, the US unit rose sharply as investors bet that robust US jobs data, due later today, would keep the US Federal Reserve on its aggressive tightening path to curb inflation.

 

Meanwhile, Minneapolis Fed President Neel Kashkari said the central bank had “more work to do” to bring down inflation, and was “quite a ways away” from being able to pause its aggressive interest rate hikes.

 

Echoing the view, Fed Governor Lisa Cook said inflation in the US remained “stubbornly and unacceptably high” and required continued interest rate hikes to ensure it started to fall. Chicago Fed Bank President Charles Evans said the Fed’s policy rate was likely headed to 4.5-4.75% by the spring of 2023, as the central bank tries to curb inflation.

 

At 1645 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 112.12 compared with 112.26 on Thursday. It was at 110.07 on Wednesday.

 

Dealers said losses in the Indian unit were capped as some state-owned banks sold dollars at around the 82.30 a dollar, likely on behalf of the Reserve Bank of India. However, the central bank’s dollar sales intervention was not very aggressive in nature, they said.

 

“The RBI tried protecting the 82.30 level initially, but the selling was mild in nature,” a dealer with state-owned bank said.

 

Three hours into trade, the Indian unit fell to a record low of 82.4250 a dollar, as banks placed fresh bets in favour of the greenback ahead of US jobs data, due later today, dealers said. Non-farm payrolls in the US are expected to rise by 275,000 in September, after a rise of 315,000 the previous month, according to a poll by The Wall Street Journal. 

 

Moreover, foreign banks persistently purchased dollars on behalf of oil marketing companies and importers, which also weighed on the rupee, dealers said.

 

Importers continuously bought dollars on expectations of further depreciation in the rupee, they said.

 

“Since most of the importers have already hedged their positions, the panic was not as much,” a dealer with a brokerage firm said. “This buying on dips tone is going to stay in the near term as well. Exporters are going to stay on the sidelines waiting for the 83 level.”

 

During the final 30 minutes of trade, the central bank stepped up its sales of the greenback, after which the rupee erased almost 10 paise of losses and went on to close at 82.3200 a dollar. 

 

 AT 1530 ISTAT 0900 ISTHIGHLOWPREVIOUS(AT 1530 IST)Spot rupee per $182.320082.200082.170082.425081.8800

 

FORWARDS

Premiums on dollar/rupee forwards ended sharply higher as importers rushed to book forward contracts, noting further weakness in the rupee, dealers said.

 

The spot rupee fell to a record low against the dollar as banks placed fresh bets in favour of the greenback ahead of US jobs data later today.

 

The premium on the one-year, exact-period dollar/rupee forward contract was at 243.04 paise as against 228.22 paise at close on Thursday. On an annualised basis, the premium was at 2.95% as against 2.79% at close in the previous session.

 

The rise in premiums was also because of arbitrage between the onshore forwards and offshore non-deliverable forwards rates, dealers said.

 

Exporters did not sell dollars for forward delivery because they expect the rupee to fall further from current levels, they said.

 

The dollar/rupee exchange rate is a component of the premium received by exporters for selling forward dollars. A rise in the dollar/rupee pushes up the receivable premiums, encouraging exporters to book contracts at those levels.

 

Absence of forward dollar sales by exporters also propped up premiums, dealers said. 

 

OUTLOOK
On Monday, the rupee will take cues from overnight movement in the dollar index after the release of US jobs data later today, dealers said. 

 

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

 

“I think the 83 level is not too far for the rupee, looking at the RBI’s intervention strategy today,” a dealer with a state-owned bank said. “It may consolidate in the 82-83 (a dollar) range for some time after that.”

 

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

 

They see immediate technical support for the Indian currency at 82.50 a dollar and long-term support at 83.00 a dollar.
 
During the day, the rupee is seen at 82.00-82.50 a dollar.

India Rupee: Premiums up as importers cover fwd dlrs, NDF arbitrage

 

 AT 1435 ISTAT 0900 ISTHIGHLOWPREVIOUS(AT 1530 IST)Spot rupee per $182.342582.200082.170082.425081.88001-year dlr/rupee fwd (paise)240.03231.83242.03230.83228.22

 

MUMBAI – Premiums on dollar/rupee forwards were sharply up as importers rushed to book forward contracts noting further weakness in the rupee, dealers said.

 

The spot rupee fell to a record low against the dollar as banks placed fresh bets in favour of the greenback ahead of US jobs data later today.

 

Premium on the one-year, exact-period dollar/rupee forward contract was at 238.53 paise as against 228.22 paise at close on Thursday. On an annualised basis, the premium was at 2.90% as against 2.79% at close in the previous session.

 

Premiums were also up noting arbitrage between the onshore forwards and offshore non-deliverable forwards rates, dealers said.

 

“There was paying pressure because of the NDF; rates rose sharply in the offshore market after market hours yesterday,” said a dealer with a state-owned bank.

 

Dealers also said that exporters did not sell dollars for forward delivery because they expect the rupee to fall further from the current levels.

 

The dollar/rupee exchange rate is a component of the premium received by exporters for selling forward dollars. A rise in the dollar/rupee pushes the receivable premiums up thus encouraging exporters to book contracts at those levels.

 

Absence of forward dollar selling by exporters also propped up the premiums, dealers said.  (Richard Fargose)

India Rupee:Falls to record low on long dlr bets, importers’ dlr buys

 

 AT 1320 ISTAT 0900 ISTHIGHLOWPREVIOUS(AT 1530 IST)Spot rupee per $182.360082.200082.170082.425081.8800

 

NEW DELHI – The rupee fell to a fresh record low against the dollar as banks placed fresh bets in favour of the greenback ahead of US jobs data from the US, due later today, dealers said. 

 

The US dollar rose sharply on Thursday as investors bet that robust US jobs data would keep the US Federal Reserve on its aggressive tightening path to curb inflation.

 

US non-farm payrolls are expected to rise 275,000 in September, after a rise of 315,000 the previous month, according to a poll by The Wall Street Journal. 

 

At 1320 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 112.07 compared with 112.26 on Thursday. It was at 110.07 on Wednesday.

 

Moreover, foreign banks persistently purchased dollars on behalf of oil marketing companies and importers, which also weighed on the rupee, dealers said.

 

Dealers said importers continuously bought dollars on expectations of further depreciation in the rupee.

 

However, dealers said losses in the Indian currency were capped as some state-owned banks sold dollars on behalf of the Reserve Bank of India. 

 

The Indian currency fell to a record low of 82.4250 a dollar today. 

 

Dealers have pegged immediate technical support for the rupee at 82.50 a dollar and long-term support at 83.00 a dollar. 

 

For the rest of the day, the Indian unit is seen moving in the range of 81.9000-82.5000 a dollar. (Pratiksha)

India Rupee: Breaches 82/$1 tracking rise in dollar, crude oil prices

 

 AT 0940 ISTAT 0900 ISTHIGHLOWPREVIOUS(AT 1530 IST)Spot rupee per $182.290082.200082.170082.312581.8800

 

NEW DELHI – The rupee breached the psychologically-crucial 82-per-dollar mark and fell to a record low against the greenback today as the US dollar settled sharply higher on Thursday, dealers said.

 

On Thursday, the US unit rose sharply as investors bet a robust US jobs data, due later today, will keep the US Federal Reserve on its aggressive tightening path to curb inflation.

 

At 0940 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 112.12 compared with 112.26 on Thursday. It was at 110.07 on Wednesday.

 

Moreover, prices of crude oil settled higher on Thursday after the Organization of the Petroleum Exporting Countries and its allies agreed to tighten global supply with a deal to cut production targets by 2 mln barrels per day, its largest reduction since 2020.

 

This also weighed on the Indian currency, dealers said. 

 

At 0940 IST, the November contract of Brent crude oil on the Intercontinental Exchange was at $94.29 a bbl as against $94.42 a bbl on Thursday. On Wednesday, the November contract had settled at $93.37 a bbl.

 

However, dealers said losses in the Indian currency were limited as some state-owned banks sold dollars near the 82.30-a-dollar level on behalf of the Reserve Bank of India. 

 

“The overall buying on dips (in dollar/rupee) sentiment is going to stay, as looking at the RBI’s intervention strategy in the past few sessions, it looks like it won’t be that aggressive,” a dealer with a state-owned bank said. “82.50 (a dollar) is the next support for rupee.”

 

The Indian currency fell to a record low of 82.3125 a dollar today. 

 

Dealers have pegged immediate technical support for the rupee at 82.50 a dollar and long-term support at 83.00 a dollar. 

 

For the rest of the day, the Indian unit is seen moving in the range of 81.9000-82.5000 a dollar. (Pratiksha)

India Rupee: Expected range for rupee – Oct 7

 

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 bank82.5081.80State-owned bank82.3581.85State-owned bank82.4081.90Foreign bank82.4581.75Private bank82.4581.90Brokerage firm82.3081.80Brokerage firm82.3081.50

(Pratiksha)

 

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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