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India Rupee Review: Sharply up on dlr sales for FPIs, weakness in dlr

Informist, Wednesday, Jan 11, 2023

 

By Aiswarya Santhosh

 

MUMBAI – The rupee ended sharply higher against the dollar for the third consecutive session today due to persistent dollar sales on behalf of foreign portfolio investors and a broad-based weakness in the dollar index, dealers said.

 

After moving in a broad range of 30 paise during the day, the Indian unit settled at 81.5750 a dollar, its highest closing level since Dec 2. 

The rupee opened higher at 81.7400 a dollar as the dollar index hovered near the seven-month low it hit on Monday. The US unit weakened globally as investors anticipate an easing of inflation in the US and, as a result, slower pace of rate hikes by the Federal Reserve.

 

Market participants await US CPI data, due Thursday, which is expected to cool to 6.5% from the previous month’s reading of 7.1%, according to an analysis by Bloomberg. Market participants now expect the Fed to increase key interest rate by 25 basis points in its February meeting.

 

At 1659 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 103.28 as against 103.23 on Tuesday. It was at 103.00 on Monday. The index fell to as much as 102.94 on Monday.

 

Further, as state-owned and foreign banks stepped in to sell dollars for foreign portfolio investments into upcoming primary debt issuances, stop-losses of banks were triggered around the 81.60 a dollar level, dealers said. This led to the Indian unit jumping to the day’s high of 81.5000 a dollar. 

 

Dealers said the inflows were on account of the State Bank of India carrying 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.

 

“Foreign banks were selling (dollars) for inflows on any upticks (in dollar/rupee),” a dealer with a state-owned bank. “This led the rupee to appreciate to 81.50 level.”

 

Dealers said that banks also sold the greenback to cut existing long-dollar bets, triggering stop-losses on long-dollar bets around the immediate resistance level of 81.60 a dollar level. This caused the Indian unit to continue on its upward movement. 

 

“The rupee is the latest of the Asian currencies to join the trend of appreciation against the dollar,” said a dealer with a big state-owned bank. “Global factors were aiding the currency.” 

 

However, some banks stepped in to purchase dollars on behalf of oil marketing companies, which limited gains for the currency, dealers said. 

 

“Importers were constantly covering around the 81.50-81.60 levels,” a dealer with a private bank said. “That is why the rupee couldn’t breach the 81.60 level for a long time.”

 

However, many importers remained on the sidelines awaiting further appreciation for the Indian unit, dealers said. 

 

Crude oil prices rose today on China reopening its economy. This also limited gains for the Indian unit, dealers said.

 

At 1659 IST, the March contract of Brent crude oil on the Intercontinental Exchange was at $80.54 a barrel as against $80.10 a bbl on Tuesday. The contract settled at $79.65 on Monday.

 

Some dealers speculated that the Reserve Bank of India purchased the greenback around the 81.50 level, to replenish its foreign exchange reserves. 

 

 AT 1530 ISTAT 0900 ISTHIGHLOWPREVIOUS(AT 1530 IST)Spot rupee per $181.575081.740081.500081.812581.7850

 

 

FORWARDS

Premiums on dollar/rupee one-year forward contracts fell today tracking a rise in US Treasury yields on Tuesday.

 

The premium on the one-year dollar/rupee contract was at 174.72 paise, against 178.02 paise on Tuesday. On an annualised basis, the premium was at 2.12%, against the previous close of 2.18%. 

 

The benchmark 10-year US Treasury yield rose on Tuesday after Fed officials reiterated their intention to hike rates further despite incoming data showing a slowing economy.

 

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

 

OUTLOOK

On Thursday, the rupee will take cues from overnight movement in the dollar index and crude oil prices. 

 

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

 

“US CPI will decide the Fed’s further course of action, we expect 6.5% figure and are going to take positions according to that,” said a dealer with a big state-owned bank. “We have factored in 25 bps hike by the Fed in the next meeting but a pause after that, and they will start cutting rates 6 months later.”

 

Dealers said the Reserve Bank of India may intervene in the market through dollar purchases to prevent the currency from appreciating sharply. 

 

Dealers have pegged immediate technical resistance for the rupee at 81.50 a dollar and long term resistance at 81.00.

 

The rupee is seen in a band of 81.30-81.80 a dollar, dealers said.

India Rupee – World FX: Dollar steady ahead of US CPI data Thu

 

 AT 1520 ISTHIGHLOWPREVIOUSGBP/USD 1.21401.21781.21261.2149EUR/USD 1.07431.07581.07261.0733NZD/USD 0.63700.63880.63510.6363AUD/USD 0.69120.69260.68790.6751USD/JPY 132.5670132.7450132.0700132.2420USD/CAD 1.34201.34421.34121.3425EUR/JPY 142.4130142.5071141.7660141.9400CHF/USD 1.08291.08631.08281.0813EUR/CHF 0.99150.99180.98980.9904

 

India Rupee – World FX: Dollar steady ahead of US CPI data Thu

 

MUMBAI – The dollar was steady against most major currencies ahead of the release of US inflation data, due to be released on Thursday. 

 

The Australian dollar rose 0.7% after the release of retail sales data today, which came in at 1.4% month-on-month for November, notably above the 0.6% forecast and (-)0.2% in October. The year-on-year figure to the end of November was 7.4% rather than the anticipated 7.2% and 6.9% a year ago.

 

The Euro was flat against the dollar after the European Central Bank Governing Council member Mario Centeno said on Tuesday he expects inflation to fall again in March and the monetary tightening process was nearing its end. (Kabir Sharma)

India Rupee:Remains up as foreign banks sell dollars for FPI inflows

 

 AT 1327 ISTAT 0900 ISTHIGHLOWPREVIOUS(AT 1530 IST)Spot rupee per $181.622581.740081.600081.812581.7850

 

 

NEW DELHI – The rupee remained higher against the greenback as foreign banks persistently sold dollars for foreign portfolio investors, dealers said. “Foreign banks were selling (dollars) for inflows. The rupee can see appreciation till 81.50 (a dollar) today itself if the inflows continue at this pace,” a dealer from a state-owned bank said.

 

Moreover, a broad-based weakness in the dollar index ahead of the US CPI data, due to be released on Thursday, also supported the Indian currency, dealers said. Annual headline inflation in the US for December is expected to cool to 6.5% from the previous month’s reading of 7.1%, according to a Bloomberg analysis. 

 

At 1327 IST, the dollar index, which measures the strength in the greenback against a basket of six major currencies, was at 103.21 as against 103.23 on Tuesday. It was at 103.00 on Monday. The index fell to as much as 102.94 on Monday.

 

However, the gains for the Indian unit were limited as state-owned banks continued to purchase dollars on behalf of oil marketing companies at around 81.60-81.65 a dollar to take advantage of the relatively lower dollar/rupee levels. 

 

Dealers have pegged immediate technical resistance for the rupee at 81.50 a dollar. The rupee is seen moving in a band of 81.50-82.00 a dollar, dealers said. (Ananya Chaudhuri)

India Rupee – Asia FX:Up on optimism over China reopening; US CPI eyed

 

NEW DELHI – Most Asian currencies were up against the dollar as the reopening of China’s economy improved risk appetite among investors. China reopened its borders on Sunday, three years after the COVID-19 pandemic broke out in the country. 

 

Broad-based weakness in the dollar also provided support to Asian units. Market participants are now focusing on the US Consumer Price Index data print for further directions on the US Federal Reserve’s rate hike cycle going ahead.

 

At 1159 IST, the dollar index, which measures the strength in the greenback against a basket of six major currencies, was at 103.18 as against 103.24 on Tuesday. It was at 103.00 on Monday. The index had fallen to as much as 102.94 on Monday.

 

The Chinese yuan was up 0.1% against the greenback after Morgan Stanley raised the country’s growth forecast for 2023 by 30 basis points to 5.7%. 

 

The Indonesian rupiah was 0.6% higher against the US currency.

 

However, the South Korean won was down 0.1% against the dollar ahead of Bank of Korea’s policy meeting on Friday, when the central bank is expected to raise rates by 25 basis points, reports said. (Ananya Chaudhuri)

India Rupee: Erases most gains as banks rush to buy dlrs for oil cos

 

 AT 0953 ISTAT 0900 ISTHIGHLOWPREVIOUS(AT 1530 IST)Spot rupee per $181.775081.740081.602581.792581.7850

 

MUMBAI – The rupee erased most of its early gains against the dollar as banks rushed to purchase dollars on behalf of oil marketing companies, dealers said. “Oil companies were likely buying (dollars) on dips (in dollar/rupee) in the market,” said a dealer with a state-owned bank. “This brought the pair down by around 12 paise.” Dealers said oil importers purchased the greenback to take advantage of the relatively lower dollar/rupee levels. 

 

The Indian unit had opened higher at 81.7400 a dollar and jumped further to 81.6025 a dollar due to broad-based weakness in the dollar index ahead of the US inflation data, which is due Thursday. The key data is likely to show signs of a cooling economy, thus, raising expectations of a slower pace of rate hikes by the US Federal Reserve, dealers said. Annual headline inflation in the US for December is expected to cool to 6.5% from the previous month’s reading of 7.1%, according to a Bloomberg analysis. 

 

At 0951 IST, the dollar index, which measures the strength in the greenback against a basket of six major currencies, was at 103.33 as against 103.23 on Tuesday. It was at 103.00 on Monday. The index fell to as much as 102.94 on Monday.

 

Dealers have pegged immediate technical resistance for the rupee at 81.50 a dollar. The unit is seen moving in a band of 81.50-82.00 per dollar, dealers said. (Aiswarya Santhosh)

India Rupee: Expected range for rupee – Jan 11

 

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 RESISTANCEState-owned bank81.9081.50State-owned bank81.9881.45Private bank81.9581.60Foreign bank 82.1081.40Brokerage firm81.8081.20Brokerage firm81.8081.50Brokerage firm81.9781.55Brokerage firm81.8081.30Brokerage firm81.8081.50State-owned oil marketing co81.7081.40

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Aiswarya Santosh)

 

End

 

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

 

Edited by Aditya Sakorkar

 

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

Source: Cogencis

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