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Wednesday, December 7, 2022

India Rupee Review: Down; persistent dollar sales by RBI limit fall

Informist, Thursday, Nov 3, 2022

 

By Richard Fargose

 

MUMBAI – The rupee traded in a narrow range against the dollar and closed slightly lower today as persistent sales of the greenback by the Reserve Bank of India supported the Indian currency, dealers said.

 

Today, the rupee settled at 82.8800 a dollar, against 82.7800 a dollar on Wednesday.

 

The rupee opened 10 paise lower tracking gains in the US dollar globally after Federal Reserve Chair Jerome Powell surprised markets with a hawkish speech.

 

Powell said that slowing the pace of rate hikes will become necessary at some point but also said it may take time for inflation to come down, and therefore, a restrictive policy stance would stay for some time.

 

The Fed chair added that the ultimate level of rates would be higher than previously expected.

 

The sentiment of investors had improved earlier after the US Federal Open Market Committee, as expected, hiked the federal funds rate to a target range of 3.75-4.00% and hinted for the first time that it could consider slowing monetary policy tightening after its fourth straight rate increase of 75 basis points.

 

But, following hawkish comments from Powell equities slipped globally, while US yields and the dollar surged.

 

At 1601 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 112.96 compared with 111.35 on Wednesday.

 

Today, the Indian rupee remained under pressure also as banks persistently purchased dollars on behalf of oil marketing companies and other importers.

 

Oil and other importers rushed to buy dollars on expectations of further depreciation in the rupee, dealers said.  

 

However, the rupee’s fall was restricted as banks sold dollars, likely on behalf of the Reserve Bank of India, to prevent the domestic currency from depreciating beyond the psychologically-crucial level of 83 per dollar.

 

“Although, RBI says it is not targeting any dollar/rupee level, but they were continuously in market,” said a dealer with state-owned bank.

 

Noting the central bank’s active intervention in the currency market, some banks stepped in to sell dollars on behalf of exporters, which provided support to the Indian unit, dealers said. 

 

“Keeping a close watch on RBI, exporters are selling dollars whenever rupee moves close to 83.00 levels,” said a dealer with private bank. “While, importers are buying(dollars) on every dips.”

 

 AT 1530 ISTAT 0900 ISTHIGHLOWPREVIOUS(AT 1530 IST)Spot rupee per $182.880082.880082.732582.922582.7800

 

FORWARDS

The premium on the one-year dollar/rupee forwards fell sharply tracking jump in the US yields today after Fed Powell’s comments.

 

Today, the 10-year benchmark US Treasury yield rose to 4.20% from 4.10% on Wednesday.

 

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.

 

The premium on the one-year, exact-period dollar/rupee forward contract was at 185.34 paise as against 195.95 paise at Wednesday’s close. On an annualised basis, the premium was at 2.24%, against Wednesday’s close of 2.35%.

 

 

OUTLOOK

On Friday, the rupee is likely to remain under pressure as the US dollar remains firm globally after Powell indicated that the rate hike cycle in the world’s largest economy will be prolonged, dealers said.

 

Dealers peg immediate technical support for the rupee at 83.25 a dollar and long-term support at 83.50 a dollar.

 

“Overall, we expect the dollar/rupee pair to trade higher in a range of 82.00 to 83.20 levels and a breakout on either side will determine further course,” said Amit Pabari, managing director of CR Forex Advisors.

 

During the day, the rupee is seen at 82.70-83.25 a dollar.

India Rupee: Remains down as oil cos, importers persistently buy dlrs

 

 AT 1415 ISTAT 0900 ISTHIGHLOWPREVIOUS(AT 1530 IST)Spot rupee per $182.905082.880082.732582.920082.7800

 

NEW DELHI – The rupee remained down against the greenback as foreign banks persistently purchased dollars on behalf of oil marketing companies and other importers, dealers said.

 

Oil and other importers rushed to buy dollars on expectations of further depreciation in the rupee, dealers said.  

 

Moreover, the dollar index strengthened further during European trade after US Federal Reserve Chairman Jerome Powell surprised markets with a hawkish speech, dealers said. This also weighed on the Indian unit, dealers said. 

 

Powell said that slowing the pace of rate hikes will become necessary at some point, but added that it may take time for inflation to come down. Therefore, a restrictive policy stance would stay for some time. The Fed chairman said that the ultimate level of rates would be higher than previously expected.

 

At 1415 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 112.68 compared with 111.35 on Wednesday.

 

However, the rupee’s fall was restricted as banks sold dollars, likely on behalf of the Reserve Bank of India, to prevent the domestic currency from depreciating beyond the psychologically-crucial level of 83 per dollar.

 

Noting the central bank’s active intervention in the currency market, some banks stepped in to sell dollars on behalf of exporters, which provided support to the Indian unit, dealers said. 

 

Dealers peg immediate technical support for the rupee at 82.90 a dollar and the next at 83.00 a dollar.

 

For the rest of the day, the Indian unit is seen in the range of 82.8000-83.1000 a dollar. (Pratiksha)

India Rupee-Asia FX: Down as dlr up after Fed Powell’s hawkish view

 

MUMBAI – Most Asian currencies were down against the greenback as the US dollar gained globally after Federal Reserve Chairman Jerome Powell surprised markets with a hawkish speech.

 

Powell said that slowing the pace of rate hikes will become necessary at some point, but added that it may take some time for inflation to come down. Therefore, a restrictive policy stance will stay for some time. 

 

As expected, the Federal Open Market Committee raised the interest rate by 75 basis points at the November meeting, but Powell’s hawkish views resulted in local equities plummeting in the morning. 

 

At 1140 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 111.92 compared with 111.35 on Wednesday.

 

The Chinese yuan fell around 0.2% against the greenback after the People’s Bank of China eased its daily yuan reference rate for the fourth straight day on Wednesday, suggesting that policymakers may be comfortable with a weaker yuan. 

 

The peso was down by 0.4% against the US unit after the Philippine central bank signalled today that it has planned a 75-basis-point hike in its key interest rates later this month to match the latest rate hike by the US Fed. (Aiswarya Santhosh)

India Rupee: Falls as dollar gains after Fed Powell’s hawkish view

 

 AT 0940 ISTAT 0900 ISTHIGHLOWPREVIOUS(AT 1530 IST)Spot rupee per $182.855082.880082.840082.882582.7800

 

NEW DELHI – The rupee fell against the dollar today as the greenback rose globally after US Federal Reserve Chairman Jerome Powell surprised markets with a hawkish speech, dealers said.

 

Powell said that slowing the pace of rate hikes will become necessary at some point but also said that it may take time for inflation to come down, and therefore, a restrictive policy stance would stay for some time.

 

The Fed chairman said that the ultimate level of rates would be higher than previously expected.

 

Investor sentiment initially improved after the US Federal Open Market Committee, as expected, raised the federal funds rate to a target range of 3.75-4.00% and hinted for the first time that it could consider slowing monetary policy tightening after its fourth straight rate increase of 75 basis points.

 

At 0940 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 111.92 compared with 111.35 on Wednesday.

 

A fall in domestic share indices also dampened sentiment for the Indian currency, dealers said. At 0940 IST, the Nifty 50 and the Sensex were down 0.2% each.

 

However, the rupee’s fall was restricted as some banks sold dollars, likely on behalf of the Reserve Bank of India, to prevent the domestic currency from depreciating beyond the psychologically-crucial level of 83 per dollar.

 

“I think the 83 (a dollar) level is not very far from here, since there is ample demand (for dollars) in the market. Equities are negative too,” a dealer with a state-owned bank said. “Looks like, the RBI is trying to protect around these levels. 82.95-82.98 levels will be watchful.”

 

Dealers peg immediate technical support for the rupee at 82.90 a dollar and next at 83.00 a dollar.

 

For the rest of the day, the Indian unit is seen in a range of 82.7500-83.1000 a dollar. (Pratiksha)

India Rupee: Expected range for rupee – Nov 3

 

NEW DELHI – Following are the expected support and resistance levels for the rupee today, as forecasted by leading banks and brokerages in an Informist poll: 

 

Participants SUPPORTRESISTANCEBig state-owned bank83.1082.70State-owned bank83.1582.75State-owned bank83.2082.70State-owned bank83.0082.55Brokerage firm83.1082.60Brokerage firm83.2082.50

(Ananya Chaudhuri)

 

End

 

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

 

Edited by Arshad Hussain

 

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.

 

Informist Media Tel +91 (11) 4220-1000

Send comments to [email protected]

 

© Informist Media Pvt. Ltd. 2022. All rights reserved.

 

Source: Cogencis

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