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India Rupee Review: At 1-mo high as dollar slips, domestic shrs rise

Informist, Monday, Jan 9, 2023

 

By Kabir Sharma

 

MUMBAI – The rupee ended at a one-month high against the greenback today as the dollar weakened globally after the US non-farm payroll data showed the tight labour market was cooling, dealers said. 

 

Data released on Friday showed that US non-farm payrolls grew by 223,000 in December against the market estimate of 200,000. Despite being higher than estimate, the month saw the lowest monthly increase in jobs in two years. This led to expectations of smaller rate hikes by the US Federal Reserve going ahead. Now, the Fed funds futures estimate around a 25% chance of a 50-basis-point rate hike in February, down from around 50% a month ago.

 

At 1402 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 103.57 against 103.87 on Friday and 105.04 on Thursday.

 

Today, the Indian currency settled 0.4% higher at 82.3600 a dollar. Most Asian currencies rose in a range of 0.5-1.0% against the dollar, with the South Korean won emerging a winner with 2.0% gains.

 

The domestic unit opened 42 paise stronger at 82.30 a dollar, tracking an overnight slump in the dollar index, dealers said. The dollar index had plunged more than 1% on Friday.

 

The dollar was further weighed down as sentiment for riskier currencies improved globally after China reopened its borders with Hong Kong on Sunday for the first time in three years, indicating an end to its stringent zero-COVID policy. 

 

The rupee was also supported by a surge in domestic equities, which rose tracking the sharp jump in bourses globally. Today, both the Sensex and the Nifty 50 ended 1.4% higher. 

 

However, state-owned banks stepped in to purchase dollars on behalf of oil marketing companies and importers around the 82.30 a dollar level amid a rise in Brent crude prices, which weighed on the rupee and dragged it to the day’s low of 82.4425 a dollar, dealers said. 

 

“Most of the movement was seen during the opening only so from there it’s a range-bound move for rupee. Oil importers were constantly there around 82.30,” a dealer with a state-owned bank said. 

 

Brent crude futures rose more than 1% today as China reopening its borders improved the demand outlook for the fuel. At 1600 IST, the March contract of Brent crude oil on the Intercontinental Exchange was at $81.00 a barrel as against $78.57 on Friday. The contract settled at $78.69 on Thursday. 

 

Dealers said exporters remained on the sidelines and waited for the 82.50 a dollar level to sell the greenback. 

 

“I think Reserve Bank of India will let the rupee appreciate because after a long time rupee is seeing such movement, and it was decoupled from other pairs for quite some time,” said a dealer with a big state-owned bank. “It is back in the range according to market sentiments and I think RBI will let it appreciate to 81.80 which is the next major support.”

 

 

 AT 1530 ISTAT 0900 ISTHIGHLOWPREVIOUS(AT 1530 IST)Spot rupee per $182.360082.300082.270082.442582.7200

 

FORWARDS

 

Premiums on dollar/rupee one-year forward contracts rose sharply today tracking a fall in US Treasury yields.

 

The premium on the one-year dollar/rupee contract was at 175.44 paise, against 169.53 paise on Friday. On an annualised basis, the premium was at 2.13%, against the previous close of 2.05%. 

 

Rupee forward premiums jumped sharply in anticipation that Fed may step back quickly from its aggressive rate hike stance in 2023,” said Arnob Biswas, head-FX research at SMC Global Securities.

 

The yield on the benchmark 10-year US Treasury notes slumped on Friday after non-farm payroll data for December showed a cooling labour market, making a case for the US Federal Reserve to ease its pace of monetary policy tightening.

 

Premiums on forwards of a currency pair are reflective of the interest rate differential between the two countries. Fall in US’ interest rates would ensure that the spread with India rates will widen further.

 

Dollar/rupee forward premiums also rose as a stronger rupee prompted banks and importers to lock in attractive levels to book dollars for forward delivery, dealers said.

 

OUTLOOK

On Tuesday, the Indian unit will take cues from overnight movement in the dollar index and crude oil prices.

 

Market participants await the release of the US inflation data on Thursday for further cues on the Fed’s policy rate hike path.

 

“It looks like the dollar weakness may stay as US CPI is also expected to come in lower,” a dealer with a big state-owned bank said.  

 

Dealers have pegged immediate technical resistance for the rupee at 82.10 a dollar.

 

The rupee is seen moving in a band of 82.00-82.50 a dollar, dealers said.

India Rupee – World FX: Dlr index slips after US jobs data; euro up

 

 AT 1522 ISTHIGHLOWPREVIOUSGBP/USD 1.21631.21741.20921.2087EUR/USD 1.06721.07001.06381.0640NZD/USD 0.63900.64100.63270.6345AUD/USD 0.69310.69470.68760.6880USD/JPY 132.4430132.5350131.3090131.8270USD/CAD 1.33851.34471.33851.3430EUR/JPY 141.3360141.4480140.1667140.8478CHF/USD 1.08161.08491.07651.0754EUR/CHF 0.98640.98920.98560.9804

 

NEW DELHI – The dollar index fell after the US jobs data released on Friday showed signs of a cooling labour market, which fuelled expectation of smaller rate hikes by the US Federal Reserve moving ahead.

 

The US non-farm payroll data showed jobs grew by 223,000 in December against the market estimate of 200,000. Despite being higher than estimate, the month saw the lowest monthly increase in jobs in two years.

 

Now, the Fed fund futures estimates around a 25% chance of a 50-basis-point rate hike in February, down from around 50% a month ago.

 

The dollar index also weakened as risk sentiment among investors improved after China reopened its border with the major business hub, Hong Kong, from Sunday after almost three years of stringent COVID curbs. 

 

At 1522 IST, the dollar index, which measures the strength in the greenback against a basket of six major currencies, was at 103.66 as against 103.88 on Friday. It was at 105.04 on Thursday. The dollar index fell more than 1% on Friday.

 

The Australian dollar rose 0.8% against the greenback, while the pound sterling and euro were up 0.6% and 0.3%,  respectively. (Ananya Chaudhuri)

India Rupee: Firm as dollar index down; oil cos’ dlr buys weighs

 

 AT 1359 ISTAT 0900 ISTHIGHLOWPREVIOUS(AT 1530 IST)Spot rupee per $182.387582.300082.270082.442582.7200

 

India Rupee: Firm as dollar index down; oil cos’ dollar buys weighs

 

MUMBAI – The rupee remained firm against the dollar as the dollar index continued to fall after US non-farm payroll showed signs of cooling in the labour market, dealers said.

 

Data released on Friday showed US non-farm payrolls rose by 223,000 in December against market estimates of 200,000. The rise in jobs in December was the lowest monthly increase in two years. This raised hopes of slower pace of rate hikes by the US Federal Reserve going ahead.

 

At 1402 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 103.57 against 103.87 on Friday and 105.04 on Thursday. The dollar index fell more than 1% on Friday.

 

Sharp gains in domestic share indices also supported the local currency, dealers said. At 1355 IST, the Sensex and the Nifty 50 were up 1%.

 

However, dollar purchases around 82.30 a dollar by oil marketing companies limited the gains for the rupee, dealers said. 

 

“Importers started covering, which pushed the rupee back to 82.41 level,” a dealer with a big state-owned bank said. “Overall, sentiment is positive for the rupee.”

 

Market participants are waiting for US inflation data on Thursday. “If the US CPI comes softer than expected, the rupee might even appreciate to 81.80,” said a dealer with a big state-owned bank.

 

The next US Fed meeting is scheduled early next month.

 

Dealers peg immediate technical resistance for the rupee at 82.10 a dollar. The rupee is seen moving in a band of 82.10-82.50 a dollar for the rest of the day, dealers said. (Kabir Sharma)

India Rupee – Asia FX: Most Asian units up as China reopens borders

 

MUMBAI – Most Asian currencies were up against the dollar as risk sentiment improved after China reopened its borders for the first time in three years, raising optimism in the Asian markets. 

 

The yuan, which was up by 0.6% against the greenback, hit a four-month-high.

 

Asian currencies were also supported by a slump in the dollar index, after data showed a cooling US labour market. The data raised expectations that the US Federal Reserve may slow down the pace of its rate hikes going ahead. 

 

At 1107 IST, the dollar index, which measures the strength in the greenback against a basket of six major currencies, was at 103.55 against 103.87 on Friday. It was at 105.04 on Thursday.

 

The Philippines peso and the South Korean won made major gains, and were up 0.9% and 1.9% against the dollar, respectively. 

 

Rise in local share indices also gave support to the Asian currencies. The Taiwan dollar was up by 0.6% after Taiwan’s benchmark Taiex index rose 2% during early trade. (Aiswarya Santhosh)

India Rupee: Sharply up as dollar index plunges post US jobs data

 

 AT 0955 ISTAT 0900 ISTHIGHLOWPREVIOUS(AT 1530 IST)Spot rupee per $182.287582.300082.277582.370082.7200

 

NEW DELHI – The rupee was sharply higher against the greenback today as the dollar index plunged on Friday after US jobs data showed a cooling labour market, leading to expectation of lower rate hikes by the US Federal Reserve going ahead, dealers said.

 

US non-farm payroll data showed Friday jobs grew by 223,000 jobs in December against the market estimate of 200,000. However, it was the lowest monthly increase in jobs in two years in the US.

 

The dollar index also fell as risk appetite improved among investors after China reopened its border with Hong Kong from Sunday, pointing to a rollback from stringent COVID-19 restrictions. 

 

At 0956 IST, the dollar index, which measures the strength in the greenback against a basket of six major currencies, was at 103.63 as against 103.88 on Friday. It was at 105.04 on Thursday.

 

“Large oil importers and other importers may wait for further downside movement (in USDINR). On Friday, they heavily bought (dollars) cause no one was sure about non-farm payroll data,” a dealer from a state-owned bank said. “If the rupee breaks 82.25 a dollar level, maybe we can see appreciation till 82.15-82.10 a dollar level.”

 

Dealers have pegged immediate technical resistance for the rupee at 82.10 a dollar.

 

The rupee is seen moving in a band of 82.10-82.50 a dollar, dealers said. (Ananya Chaudhuri)

India Rupee: Expected range for rupee – Jan 9

 

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 bank82.5082.10Foreign bank82.5082.00Brokerage firm82.5081.80Brokerage firm82.3582.08

 

(Aiswarya Santosh)

 

End

 

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

 

Edited by Tanima Banerjee

 

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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Send comments to [email protected]

 

© Informist Media Pvt. Ltd. 2023. All rights reserved.

 

Source: Cogencis

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