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India Rupee Review: Sharply up as dlr falls globally, local shrs surge

Informist, Thursday, Nov 24, 2022

 

By Pratiksha and Ananya Chaudhuri

 

NEW DELHI – The rupee ended sharply higher against the dollar today as the greenback weakened globally after minutes of the US Federal Open Market Committee’s meeting in November showed policymakers had agreed to slow the pace of rate hikes going ahead, dealers said.

 

Domestic equity indices rising to all-time highs during the last leg of the trade also supported the rupee, dealers said.

 

The Indian currency settled 0.3% higher at 81.6300 a dollar after moving in a range of 17 paise throughout the day.

The rupee had opened 12 paise higher against the dollar at 81.7200, tracking a sharp overnight fall in the dollar globally after the US FOMC minutes, which were released past midnight Wednesday, dealers said.

 

Market participants now largely expect the Fed to come down to hiking rates by 50 basis points in December, instead of a 75-bps rate hike expected earlier.

 

The dollar index, which measures the strength of the greenback against a basket of six major currencies, plunged to a three-month low today.

 

At 1640 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 105.88 against 106.08 on Wednesday. On Tuesday, the index was at 107.22.

Noting the weakness in the greenback, banks sold dollars to cut their long dollar positions placed earlier, which further supported the Indian currency, dealers said.

 

“We were expecting the rupee to open around 81.60, but the reaction to the FOMC minutes was not that sharp,” a dealer with a state-owned bank said. “I think the rupee won’t appreciate much from here and will slowly consolidate in a range of 81.20-82.20.”

 

However, state-owned and private banks rushed to buy dollars on behalf of oil marketing companies, noting relatively lower dollar/rupee levels, after which the rupee erased some gains and touched the day’s low of 81.7725 a dollar, dealers said.

 

“The overall buy on dips (in dollar/rupee) mood was there. Every dip around 81.60-81.65 was bought by importers,” a dealer with a state-owned bank said.

 

Crude oil prices fell more than 3% on Wednesday as Group of Seven Nations considered putting a price cap on Russian crude and US gasoline inventories rose more than analyst expectations.

 

At 1640 IST, the January contract of Brent crude oil on the Intercontinental Exchange was at $84.64 a barrel as against $85.41 a bbl on Wednesday. Prices were at $88.36 a bbl on Tuesday.

 

Meanwhile, volume in the currency market was lower than usual because of Thanksgiving holiday in the US, said dealers.

 

The rupee jumped to the day’s high of 81.60 a dollar after domestic share indices rose sharply during the last leg of trade.

 

The Nifty 50 and Sensex ended at lifetime highs after US FOMC minutes signalled slow interest rate hikes by the Fed and rollover of long positions on expiry of November derivatives contracts. The benchmark indices ended 1.2% higher each.

 

 AT 1530 ISTAT 0900 ISTHIGHLOWPREVIOUS(AT 1530 IST)Spot rupee per $181.630081.720081.600081.772581.8450

 

FORWARDS

Premiums on dollar/rupee forward contracts ended off highs because exporters sold the greenback for forward delivery to lock in contracts at relatively high levels, dealers said.

 

Premiums rose to a high of 2.14% during the day tracking a fall in US Treasury yields, dealers said.

 

Yield on the benchmark 10-year US Treasury note fell on Wednesday after minutes of Fed’s November meeting affirmed that officials are looking at slower rate hikes going forward.

 

Premium on the one-year dollar/rupee contract was at 171.03 paise as against 173.31 paise at close on Wednesday. On an annualised basis, the premium was at 2.10% against the previous close of 2.11%.

 

Premiums on forwards of a currency pair are reflective of the interest rate differential between the two countries. Less aggressive interest rate hikes by the Fed would ensure the spread with rates in India widens further.

 

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

 

“As the currency market was closed today for Thanksgiving holiday in the US, tomorrow there will be buying of the greenback because of pent-up demand, which can weigh on the rupee,” said a dealer from a private bank.

 

Dealers said that rupee will likely move in the range of 81.40-81.90 for some time. They peg technical support for the rupee at 81.90 a dollar and resistance at 81.50 a dollar.

 

During the day, the rupee is seen at 81.50-81.90 a dollar.

India Rupee – World FX: Dollar index hits 3-month low post FOMC minutes

 

 AT 1534 ISTHIGHLOWPREVIOUSGBP/USD 1.21011.21131.20481.2054EUR/USD 1.04191.04491.03941.0393NZD/USD 0.62560.62690.62230.6229AUD/USD 0.67430.67680.67280.6732USD/JPY 138.5430139.6500138.5200139.5870USD/CAD 1.33471.33621.33291.3352EUR/JPY 144.3510145.2030144.3080145.1000CHF/USD 1.06031.06531.05901.0606EUR/CHF 0.98260.98360.97960.9796

 

MUMBAI – The US dollar fell against other major currencies today as minutes of the US Federal Open Market Committee’s meeting showed Federal Reserve officials are in favour of slowing the pace of rate hikes going ahead.

The dollar index, which measures the strength of the greenback against a basket of six major currencies, fell to a three-month low today. At 1534 IST, the index was at 105.87, against 106.08 on Wednesday. On Tuesday, it was at 107.22.

 

Weekly jobless claims in the US rose the most since June, to 240,000 against expectations of 225,000 and 223,000 the previous month, which weighed further on the dollar.

The euro rose 0.2% against the dollar ahead of the minutes of the European Central Bank’s October meeting, scheduled to be released later today.

 

The Japanese yen gained 0.6% and hit a high of 138.53 a dollar for the first time since the US Consumer Price Index data came out 10 days ago.

 

The pound sterling was up 0.2% against the dollar after the UK’s first reading of the S&P Global Manufacturing PMI for November came in at 46.2 against the market forecast of 45.8.

 

The New Zealand dollar was also up 0.2% against the dollar as the Reserve Bank of New Zealand hiked the interest rate by a record 75 basis points. 

 

US markets are closed today on account of Thanksgiving, leading to muted volumes globally. (Kabir Sharma)   

India Rupee: Remains high as dollar index hits 3-month low

 

 AT 1317 ISTAT 0900 ISTHIGHLOWPREVIOUS(AT 1530 IST)Spot rupee per $181.710081.720081.660081.772581.8450

 

NEW DELHI – The rupee remained high against the greenback tracking weakness in the dollar index, dealers said. The index fell to a near three-month low after the minutes of the US Federal Open Market Committee November meeting showed that policymakers agreed on slowing the pace of rate hikes ahead.

 

Weakness in the US unit prompted traders to sell the greenback to cut their long dollar positions placed earlier which also supported the Indian unit, dealers said.

 

At 1317 IST, the dollar index was at 105.82 against 106.08 on Wednesday. On Tuesday, the index was at 107.22.

 

However, private banks bought dollars on behalf of oil marketing companies, limiting gains for the rupee, dealers said.

 

“Oil importers are buying at the levels of 81.66-81.70 (a dollar) level. The overall theme is buy on dips (in dollar/rupee),” said a dealer from a private bank. 

 

Meanwhile, volumes in the currency market were lacklustre today because of Thanksgiving holiday in the US, said dealers.

 

The immediate technical support for the rupee is pegged at 81.80 a dollar, and resistance is pegged at 81.50, dealers said.

 

The rupee is expected to move in the range of 81.50-81.90 for the rest of the day, dealers said. (Ananya Chaudhuri)

India Rupee: Rises as dollar slips globally post US FOMC minutes

 

 AT 0950 ISTAT 0900 ISTHIGHLOWPREVIOUS(AT 1530 IST)Spot rupee per $181.697581.720081.670081.752581.8450

 

NEW DELHI – The rupee rose against the dollar today as the greenback weakened globally after the minutes of the Federal Open Market Committee’s November meeting showed the US Federal Reserve officials were considering slowing the pace of rate hikes going ahead, said dealers.

 

The FOMC November meeting minutes showed most policymakers agreed that slower pace of interest rate hikes would be appropriate soon, despite the risk to inflation outlook to remain upward. 

 

Market participants now largely expect the Fed to come down to hiking rates by 50 basis points in December, instead of 75-basis-point rate hike expected earlier.

 

The dollar index, which measures the strength of the greenback against a basket of six major currencies, plunged to a 3-month low during early trade. 

 

At 0951 IST, the dollar index was at 105.70 against 106.08 on Wednesday. On Tuesday, the index was at 107.22.

 

Moreover, a sharp fall in crude oil prices supported the Indian unit, dealers said. Prices of crude oil fell sharply on Wednesday as Group of Seven nations considered a price cap on Russian oil above the current market level, and US crude oil inventories rose more than expected.
 

A fall in crude oil price lowers India’s import bill which subsequently supports the currency.

 

At 0952 IST, the January contract of Brent crude oil on the Intercontinental Exchange, was at $85.28 a bbl against $85.41 a bbl on Wednesday. Prices were at $88.36 a bbl on Tuesday.

 

“Overall importers buying on dips (in dollar/rupee) will be there today,” said a dealer from a state-owned bank. “Today, the rupee may remain less volatile and trade in a thin band because of holiday in the US,” the dealer said. 

 

US banks are closed today for Thanksgiving Day.

 

The immediate technical support for the rupee is pegged at 81.90 a dollar, and resistant is pegged at 81.50, dealers said.

 

The rupee is expected to trade in the 81.50-81.80 range for the rest of the day, dealers said. (Ananya Chaudhuri)

India Rupee – Asia FX: Most up after US FOMC minutes; won rises 2%

 

MUMBAI – Most Asian currencies were up against the dollar today as the minutes of the US Federal Open Market Committee’s meeting indicated that policymakers are in favour of smaller interest rate hikes going ahead.

 

The US dollar weakened globally as the prospect of a slower pace of interest rate hikes from the Fed encouraged investors to place bets on riskier assets such as Asian currencies.

 

At 0930 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 105.73 as against 106.08 on Wednesday. On Tuesday, the index was at 107.22.

 

The Chinese yuan strengthened 0.3% to 7.1201 against the US dollar today as the FOMC minutes outweighed fears of a weakening economy due to the surge in COVID-19 cases.

 

The South Korean won led the gains and was up nearly 2% due to a weak dollar and as the Bank of Korea increased the benchmark rate by 25 basis points, which was widely expected by the market. Citing the recent easing of foreign exchange risks, Bank of Korea Governor Rhee Chang-yong said that the rate decision was unanimous.

 

The Malaysian ringgit was closely behind with 1% gains against the dollar. The Taiwanese dollar and Philippines peso were also up by 0.6% and 0.4%, respectively. (Kabir Sharma)  

India Rupee: Expected range for rupee – Nov 24

 

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

 

ParticipantsSUPPORTRESISTANCEState-owned bank81.9081.30State-owned bank81.8581.40Private bank81.8581.50Private bank81.9081.60Foreign bank81.8581.35Foreign bank81.7081.30Brokerage firm81.9081.20

(Kabir Sharma)

 

End

 

US$1 = 81.63 rupees

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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Source: Cogencis

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