Informist, Wednesday, Dec 7, 2022
By Pratiksha and Ananya Chaudhuri
NEW DELHI – The rupee ended sharply up against the greenback today, snapping a three-day losing streak, due to persistent dollar sales on behalf of exporters, dealers said. This was despite dollar purchases on behalf of oil marketing companies and other importers, dealers said.
Today, the Indian unit settled 0.2% higher at 82.4700 a dollar.
The Indian currency started the day largely steady against the greenback at 82.6600 a dollar, as against 82.6150 a dollar on Tuesday, as traders remained cautious ahead of the outcome of the Reserve Bank of India’s Monetary Policy Committee.
However, the Indian unit’s reaction to the policy rate decision was lacklustre as the committee raised the repo rate by 35 basis point to 6.25%, which was thought to be on expected lines, dealers said.
“The rupee steadied at 82.50 after RBI hiked rates by 35 bps today and remained hawkish in its commentary with market now expecting another 50 bps before calling a pause,” said Anil Kumar Bhansali, head of treasury at Finrex Treasury.
Governor Shaktikanta Das said the MPC was focused on withdrawal of accommodation in its fight to bring down the inflation below 6%.
The committee also revised its GDP growth forecast for financial year 2022-23 (Apr-Mar) by 20 bps to 6.8% from 7.0% earlier.
Gradually, the rupee rose to the day’s high of 82.4025 a dollar, as foreign banks rushed to sell dollars on behalf of exporters, who expected the rupee might not depreciate further, said dealers.
“The policy was no surprise to the market, but I think after the announcement, the market took a breather,” a dealer with a private bank said. “Exporters sold around the 82.60 level. Like the past few days, the market was not flow based today.”
Dealers said exporters found the 82.50-82.60 levels attractive to sell dollars, noting the sharp fall in the rupee during the past few days. The Indian unit had fallen to a one-month low on Tuesday.
Meanwhile, some banks bought dollar on behalf of oil marketing companies and other importers which limited gains for the rupee, and it traded in a range of 82.40-82.60 a dollar for a majority of the trade, dealers said.
Crude oil prices fell today as big US banks warned about likely recession next year, which supported the greenback. US unit and crude oil price move inversely as a strong dollar makes crude oil expensive for other currency holders which reduces risk appetite.
At 1650 IST, the February contract of Brent crude oil on the Intercontinental Exchange was at $78.60 a bbl against $79.35 on Tuesday. The contract settled at $82.68 a bbl on Monday.
“There’s a shortage of dollars in the market. In case of a natural day when normal demand is being supplied easily, you don’t see demand coming. Now, since shortage is there, demand doubles as people who have supply of dollars will also buy,” a dealer with a brokerage firm said.
Talking about the sharp fall in forward premiums, RBI Deputy Governor Michael Patra said today, “there’s cash shortage in spot market, but that is now getting alleviated. If you see, the forward premiums are starting to correct today, so flows are coming back.”
On Tuesday, premiums on one-year dollar/rupee forward contracts slipped to their lowest level in over 13 years. However, the rupee found some relief noting the recovery in the forward premiums today.
A fall in domestic share indices dampened the sentiment for the rupee. Today, the Nifty 50 and Sensex ended 0.4% and 0.3% down, respectively.
Premiums on dollar/rupee forwards jumped today after the Reserve Bank of India’s Monetary Policy Committee raised the policy repo rate by 35 basis points to 6.25%, dealers said.
According to an Informist poll of 30 respondents, a majority of analysts had expected the RBI’s rate-setting panel to hike the repo rate by 35 bps.
Premiums also rose as importers and banks bought dollars for forward delivery at relatively low levels after a sharp fall in premiums on Tuesday, dealers said.
On Tuesday, premiums on one-year dollar/rupee forward contracts slipped to their lowest level in over 13 years as banks and exporters persistently sold the greenback for forward delivery on the view that the interest rate differential between Indian and US debt may continue to narrow and due to dollar crunch in the global financial system, dealers said.
The premium on the one-year, exact-period dollar/rupee forward contract was at 146.53 paise as against 134.80 paise at Tuesday’s close. On an annualised basis, the premium was at 1.77% as against 1.63% at the previous close.
On Thursday, the rupee will take cues from overnight movement in the dollar index and crude oil prices, dealers said.
“The picture now shifts to the US, ECB and UK with US inflation data first on 13th and is expected to come at 0.3% in November against 0.4% for October,” said Bhansali. “The FOMC meeting is on Dec 14 and BOE and ECB on Dec 15, after which we will have the holiday season.”
Dealers see long term technical support for the Indian currency at 82.90 a dollar.
During the day, the rupee is seen moving within a range of 82.20-82.90 a dollar.
India Rupee: Rises as exporters sell dlrs; RBI hikes rate by 35 bps
India Rupee: Rises as exporters sell dlrs; RBI hikes rate by 35 bps
NEW DELHI – The rupee rose against the greenback as banks sold dollars on behalf of exporters on expectations that the Indian unit might not depreciate further, dealers said.
“The policy commentary was thought as slightly hawkish, so once the rupee settled after the announcement, exporters came around the 82.50 level,” a dealer with a big state-owned bank said. “The 35-bps rate hike was exactly as expected.”
The rupee was largely unchanged after the Reserve Bank of India’s Monetary Policy Committee raised the repo rate by 35 basis point to 6.25%, which was thought to be on expected lines, dealers said.
According to an Informist poll of 30 respondents, comprising banks, mutual funds and rating agencies, a majority of analysts had expected the RBI’s rate-setting panel to hike the repo rate by 35 bps.
The committee decided to remain focused on the withdrawal of accommodation. The central bank also lowered the GDP projections for 2022-2023 (Apr-Mar) to 6.8% from the earlier 7.0%.
Governor Shaktikanta Das said, “India cannot remain entirely decoupled with the spillovers from the global economic slowdown.”
A fall in domestic share indices weighed on the Indian unit, dealers said. At 1122 IST, the Nifty 50 and the Sensex were down 0.3% each.
The immediate technical support for the rupee is pegged at 82.90 a dollar, dealers said.
The rupee is expected to trade in the 82.20-82.90 range for the rest of the day, dealers said. (Pratiksha)
India Rupee – Asia FX: Mixed; China continues to ease COVID curbs
MUMBAI – Most Asian currencies were mixed against the US dollar as optimism over signs of reopening of the Chinese economy was offset by fears of an aggressive rate hike path by the US Federal Reserve.
On Tuesday, Beijing allowed residents into parks, supermarkets, offices and airports without COVID tests.
Further, higher-than-expected US services industry data for November raised concerns that the Federal Reserve may lift interest rates higher than projected at its Dec 14 meeting.
An over 4% fall in crude oil prices on Tuesday also supported Asian currencies.
Crude oil prices fell as traders concluded that the price cap on Russia’s exports introduced by the US, European Union and their allies will have little impact on the commodity’s availability. Prices also fell due to growing recession fears.
Asian currencies benefitted from the slump as most Asian countries import crude oil.
At 0944 IST, the February contract of Brent crude oil on the Intercontinental Exchange was at $79.51 a bbl as against $79.35 on Tuesday. The contract settled at $82.68 a bbl on Monday.
Most currencies moved in a narrow range today. While the Myanmar ringgit was down 0.2%, the Philippine peso was up 0.8% against the US dollar.
India Rupee: Expected range for rupee – Dec 7
MUMBAI – Following are the expected support and resistance levels for the rupee today, as forecasted by leading banks and brokerages in an Informist poll:
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Maheswaran Parameswaran
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