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India Rupee Review: At 5-week high on dlr sales for FPIs, exporters

Informist, Tuesday, Jan 10, 2023

 

By Kabir Sharma and Pratiksha

 

MUMBAI – The rupee closed at over a five-week high against the US dollar today as state-owned banks persistently sold dollars for foreign portfolio inflows into upcoming primary debt issuances, dealers said.

 

According to media reports, State Bank of India is likely carry out a planned 100-bln-rupee sale of infrastructure bonds in the market this week, with the securities likely to have maturity of 15 years.

 

Today, the Indian currency settled 0.7% higher at 81.7850 a dollar.

 

The Indian unit opened sharply up as the dollar index fell to a seven-month low on Monday as recent US economic data led to expectations that the US Federal Reserve may slow down its pace of rate hikes, dealers said. The greenback fell as market participants now expect the Fed to not raise rates beyond 5.0%, from its current range of 4.25%-4.50%, as recent economic data showed inflation and growth may be cooling down. 

 

Market participants expect the US Fed to increase key interest rates by 25 basis points at its February meeting.  

 

At 1650 IST, the dollar index, which measures the strength in the greenback against a basket of six major currencies, was at 103.20, against 103.00 on Monday. It was at 103.87 on Friday. The index fell to 102.94 on Monday. 

 

As soon as the market opened, the rupee rose further to 82.15 a dollar as foreign banks, including a UK and US-based bank, sold dollars, likely for foreign fund inflows, dealers said.

 

Dealers said broad-based weakness in the US unit prompted traders to sell the greenback to cut existing long dollar bets, triggering stop losses on long dollar bets around the immediate resistance level of 82.10 a dollar level, dealers said.

 

Further, as state-owned banks stepped in to sell dollars for foreign portfolio investments into upcoming primary debt issuances, stop losses of many banks were triggered around the 81.90-81.80 a dollar level, dealers said. This led to the Indian unit ascending to the day’s high of 81.7150 a dollar. 

 

“This amount of appreciation was expected after the tight range we saw during the past month,” a dealer with a brokerage firm said. “Once the inflows hit the market, it was mostly panic selling. Exporters sold aggressively and long positions were cut.” 

 

The Indian unit had been trading in a tight range of 82.50-83.00 for the last one month.

 

Banks also sold dollars on behalf of exporters with a sense of urgency on expectation of further appreciation in the rupee in the near term, which too supported the domestic currency, dealers said. 

 

“Foreign banks were selling dollars for exporters as they expect the rupee to appreciate further, and they want to cut their losses,” a dealer with a state-owned bank said. 

 

The broad surge in Asian currencies against the dollar also supported the rupee, dealers said.   

 

“The overall sentiment in the market has improved, and it is reflecting in the surge in almost all Asian currencies,” a dealer with a big state-owned bank said.

 

A slump in domestic indices, however, capped gains for the rupee, dealers said. Both the Nifty 50 and the Sensex ended 1% lower today. 

 

The ease in dollar purchases on behalf of importers also aided the rupee, dealers said. They said importers remained on the sidelines noting the sharp rise in the domestic unit and may come in to buy at around 81.50 a dollar level. 

 

 

 AT 1530 ISTAT 0900 ISTHIGHLOWPREVIOUS(AT 1530 IST)Spot rupee per $181.785082.270081.715082.307582.3600

 

FORWARDS

Premiums on dollar/rupee one-year forward contracts rose today as a surge in the rupee prompted banks and importers to buy dollars for forward delivery, dealers said.

 

The premium on the one-year, exact-period dollar/rupee forward contract was at 178.02 paise as against 175.44 paise at Monday’s close. On an annualised basis, the premium was at 2.18% as against 2.13% at the previous close.

 

“After rupee’s sharp rise, there was paying over all in forwards,” a dealer with a state-owned bank said. “If the appreciation sustains, we will continue seeing this.”

 

Premiums also rose tracking a fall in US Treasury yields on Monday, dealers said. The yield on the benchmark 10-year US Treasury notes fell on Monday on expectations that the US Fed may ease its pace of monetary policy tightening going ahead.

 

Premiums on forwards of a currency pair are reflective of the interest rate differential between the two countries.

 

OUTLOOK

On Tuesday, the rupee will take cues from the movement in the dollar index after Federal Reserve Chairman Jerome Powell’s speech, due later today. 

 

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

 

“We’ll have to see what levels the Reserve Bank of India will find itself comfortable in buying from here,” a dealer with a brokerage firm said. “The next few days will be crucial to gauge that.” 

 

India’s consumer price index data for December, due to be released on Thursday, is also awaited, dealers said. 

 

Dealers have pegged immediate technical resistance for the rupee at 81.70 a dollar and long term resistance at 81.50.

 

The rupee is seen moving in a band of 81.60-82.10 a dollar, dealers said.

India Rupee: Surges as PSU banks sell dlrs for FPI inflows, exporters

 

 AT 1459 ISTAT 0900 ISTHIGHLOWPREVIOUS(AT 1530 IST)Spot rupee per $181.867582.270081.715082.307582.3600

 

India Rupee: Surges as PSU banks sell dlrs for FPI inflows, exporters

 

MUMBAI – The rupee surged against the dollar today as state-owned banks persistently sold the greenback for foreign portfolio inflows into upcoming primary debt issuances, dealers said. This led to stop-losses being triggered on long dollar bets at around 81.80 a dollar, dealers said. 

 

“Inflows worth 10,000 crores (100 bln) rupees from SBI infrastructure bond was the main reason for the fall in dollar/rupee from 82.25 to 81.75 today as oil companies stepped aside after buying for almost one month,” a dealer with a brokerage firm said. 

 

State Bank of India may carry out a planned 100-bln-rupee sale of infrastructure bonds in the market this week, with the securities likely to have maturity of 15 years, according to media reports. 

 

Some banks also sold dollars on behalf of exporters, who expect the Indian unit to appreciate further from here on, dealers said. 

 

The broad surge in Asian currencies against the dollar also supported the rupee, dealers said.   

 

Dealers have pegged immediate technical resistance for the rupee at 81.70 a dollar.

 

The rupee is seen moving in a band of 81.60-82.10 a dollar, dealers said. (Kabir Sharma)

India Rupee: Surges as traders cut long dollar bets, stop losses hit

 

 AT 1335 ISTAT 0900 ISTHIGHLOWPREVIOUS(AT 1530 IST)Spot rupee per $182.022582.270082.027582.307582.3600

 

India Rupee: Surges as traders cut long dollar bets, stop losses hit

 

NEW DELHI – The rupee rose further against the greenback as broad based weakness in the US unit prompted traders to sell the greenback to cut existing long dollar bets, dealers said.

 

This led to stop losses being triggered on long dollar bets around 82.10 a dollar level, dealers said.

 

The dollar index hovered near its seven-month low as recent economic data fuelled expectation of smaller rate hikes by the US Federal Reserve.

 

At 1335 IST, the dollar index, which measures the strength in the greenback against a basket of six major currencies, was at 103.30, against 103.00 on Monday. It was at 103.87 on Friday. The index fell to 102.94 on Monday.

 

Foreign banks, including a UK and US-based bank, sold dollars, likely for foreign fund inflows, which also supported the Indian unit, dealers said.

 

Moreover, some banks sold the greenback on behalf of exporters cautiously, as they expected the Indian unit to appreciate further in the near term, dealers said. 
 

The eases in dollar purchases on behalf of importers also aided the rupee, dealers said. 

 

“Importers are resistant to buy (dollars) because they are expecting if the rupee goes up from here, they could get some better levels,” a dealer from a private bank said.

 

Investors await the US Fed Chairman Jerome Powell’s speech later today, as well as the US Consumer Price Index reading for the month of December for further cues on US Fed’s monetary policy tightening path going ahead.

 

However, a slump in domestic equity indices limited gains for rupee. At 1335 IST, both the Sensex and Nifty 50 were down 1.1%.

 

Dealers have pegged immediate technical resistance for the rupee at 81.80 a dollar.

 

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

India Rupee – Asia FX: Most up on upbeat sentiment as China reopens

 

NEW DELHI – Most Asian currencies were higher against the US dollar as investors were optimistic after China reopened its borders and eased travel curbs from Sunday, after three years.

 

The Philippine peso was up 0.3% against the US unit after the Philippines’ Chamber of Commerce and Industry President George T. Barcelon said the country would continue a healthy pace of recovery in 2023, amid growing overseas remittances and a rebounding domestic economy.

 

The South Korean was up 0.2% against the greenback, supported by gains in local share indices. The benchmark Kospi index was up 0.4% today.

 

The Chinese yuan was flat against the greenback after China’s state media said that as there could be two-way volatility in its local currency, investors should remain cautious. (Ananya Chaudhuri)

India Rupee: Rises sharply as dollar index hits 7-month low Mon

 

 AT 0950 ISTAT 0900 ISTHIGHLOWPREVIOUS(AT 1530 IST)Spot rupee per $182.195082.270082.160082.307582.3600

 

MUMBAI – The rupee rose sharply against the greenback today as the dollar index slid to a seven-month low on Monday after recent economic data sparked expectations that the US Federal Reserve may slow down its pace of rate hikes, dealers said.

 

The losses in the greenback were driven mainly by expectations that the Fed will not raise rates beyond 5%, from its current range of 4.25%-4.50%, as inflation and growth cool, as shown by recent economic data. Market participants expect the US Fed to increase key interest rates by 25 basis points in February.

 

At 0950 IST, the dollar index, which measures the strength in the greenback against a basket of six major currencies, was at 103.23, against 103.00 on Monday. It was at 103.87 on Friday. The index fell to 102.94 on Monday.

 

Further, foreign banks stepped in to sell dollars, likely for foreign fund inflows, which supported the Indian currency, dealers said. 

 

“Some foreign banks are selling (dollars) for inflows, but I think importers should come around 82.15 (a dollar) level,” a dealer from a state-owned bank said. “However, the 82.15-82.40 range should sustain for rupee.”

 

Further the rupee was also aided by gains in yuan amid optimism surrounding China’s reopening of its international borders, dealers said. 

 

A fall in crude oil prices also supported the Indian unit. Crude oil prices fell slightly after the gains on Monday as investors awaited more clarity on the Fed’s rate hike path. Market participants now await US Federal Reserve Chairman Jerome Powell’s speech later today, as well as inflation data due on Thursday for further cues.

 

At 0950 IST, the March contract of Brent crude oil on the Intercontinental Exchange was at $79.22 a barrel, against $79.65 on Monday. The contract settled at $78.57 on Friday. 

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.  (Aiswarya Santhosh)

India Rupee: Expected range for rupee – Jan 10

 

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

 

Participants  SUPPORT  RESISTANCEBig state-owned bank82.4582.10State-owned bank82.5082.02Private bank82.3682.08Foreign bank 82.5582.05Brokerage firm82.5081.80Brokerage firm82.3382.08Brokerage firm82.4081.90

 

 

 

 

 

 

 

 

 

 

 

(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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