Informist, Thursday, Feb 2, 2023
By Aiswarya Santhosh
MUMBAI – The rupee today settled at a three-week low against the dollar, giving up all the early gains, as foreign banks persistently bought the greenback on behalf of foreign portfolio investors and importers, dealers said.
After moving in a broad range of 48 paise through the day, the rupee closed 0.3% lower at 82.1725 a dollar. The unit settled below the psychologically crucial level of 82 per dollar for the first time since Jan 9.
The rupee had opened 10 paise higher at 81.8200 a dollar as the dollar index plunged to a nine-month low on Wednesday after US Federal Reserve Chairman Jerome Powell acknowledged progress in its fight against inflation, raising market expectations of an end to the Fed’s rate hike campaign in the near term.
The Federal Open Market Committee meeting raised the interest rate by 25 basis points, which was along expected lines, as the two-day meeting came to a close.
Powell said that “the disinflationary process has started”, but the committee was highly attentive to inflation risks as it seeks to bring the annual consumer price rise in line with its 2% target. He said the Fed will continue to take decisions on a meeting-by-meeting basis.
At 1649 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 101.25 against 101.21 on Wednesday. It was at 102.1 on Tuesday. The index fell to a nine-month low of 100.82 early in trade.
Market participants are now waiting for policy outcomes of the European Central Bank and Bank of England later today at 1845 IST and 1730 IST, respectively.
Preliminary estimates show that inflation in the Eurozone eased more than anticipated in January, with market participants expecting the central bank to raise the interest rate by 50 bps.
The Bank of England is also expected to raise rates by 50 bps, with market participants likely looking for hints regarding an ease in the central bank’s tightening pace from March.
As the rupee touched the day’s high of 81.7200 a dollar shortly after opening, importers and oil marketing companies purchased the greenback noting the relatively lower dollar/rupee levels, dealers said.
Dealers said foreign banks also persistently bought dollars for foreign portfolio investors, which weighed on the rupee further. Due to this, the unit touched the day’s low of 82.20 a dollar towards the end of market hours, dealers said.
The dollar outflows were likely due to Adani Enterprises Ltd’s move to withdraw its 200-bln-rupee follow-on public offering, as announced on Wednesday, dealers said.
Adani Enterprises, the flagship company of the Adani Group, withdrew the follow-on public offering citing sharp fluctuation in its shares and with a view to protect investors from financial losses.
“Some outflows are there after the Adani FPO fiasco,” said a dealer with a private bank. “FPIs who brought in their money, may take back. So, the rupee will be under some pressure.”
The rupee was also weighed down as exporters were absent in the market. Some dealers speculated that the Reserve Bank of India likely sold the greenback at 82.00 a dollar level, which limited losses in the Indian unit.
FORWARDS
Premiums on dollar/rupee forward contracts fell as banks and exporters sold dollars for delivery later noting weakness in the spot rupee, dealers said.
Premium on the one-year, exact-period dollar/rupee forward contract was at 186.00 paise, as against 191.00 paise at close on Wednesday. On an annualised basis, the premium was at 2.26% as against 2.32% at the previous close.
OUTLOOK
On Friday, the rupee will take cues from overnight movement in the dollar index after the European Central Bank and the Bank of England announce their policy outcome later today.
“Market may become volatile after their outcome,” said a dealer with a private bank.
Rupee may also track the overnight movement in crude oil prices.
The next technical support for rupee is pegged at 82.20 a dollar, dealers said.
The rupee might move in a range of 81.80-82.30 a dollar during the day, dealers said.
India Rupee – World FX: Euro at 10-month high as dollar falls post FOMC meet
India Rupee – World FX: Euro at 10-mo high as dlr falls post FOMC meet
MUMBAI – The Euro touched a ten-month high against the dollar today as the US Federal Reserve slowed the pace of rate hikes to 25 basis points and Fed President Jerome Powell hinted that the rate hiking cycle might come to an end.
The Euro was up 0.1% against the dollar ahead of the European Central Bank’s meeting later today.
The dollar index touched a nine-month low as Powell said “the disinflationary process has started”, giving way to hopes of a softer approach towards the control of inflation by the central bank.
At 1531 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 101.11 as against 101.21 on Wednesday. It was at 102.1 on Tuesday. The index fell to 100.82 in early trade.
The pound sterling was almost down 0.3% against the dollar ahead of the outcome of the Bank of England’s policy meeting, due later today. (Kabir Sharma)
India Rupee: Erases gains on dlr buys for FPI outflows, importers
MUMBAI – The rupee erased all earlier gains against the dollar today as banks purchased the greenback on behalf of importers and foreign portfolio investors, dealers said.
“There are outflows (dollars) likely related to the withdrawal of Adani FPO,” said a dealer with a state-owned bank. “There is selling of domestic equities by FPIs”
Adani Enterprises Ltd, the flagship of the Adani Group, announced on Wednesday that it has decided to withdraw its 200-bln-rupee follow-on public offering, keeping in mind the fluctuation in the company’s stock and with a view to protect investors from financial losses.
At 1333 IST, both the Nifty 50 and the Sensex were down 0.4% and 0.2%, respectively.
Moreover, banks bought the greenback on behalf of importers, which further weighed on the Indian unit, dealers said. Dealers said importers came in noting relatively lower dollar/rupee levels during early trade. Earlier today, the Indian unit rose to a high of 81.72 a dollar, owing to a slump in the dollar index.
The US central bank raised the interest rate by 25 basis points, along expected lines as its two-day policy meeting came to a close.
At 1333 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 101.08 as against 101.21 on Wednesday. It was at 102.10 on Tuesday. The index fell to as much as 100.82 in early trade.
Dealers said exporters are waiting for 82.00 a dollar level to sell the greenback.
Dealers have pegged technical support for the rupee at 82.00 a dollar. The rupee is seen at 81.60-82.00 for the rest of the day, dealers said. (Aiswarya Santhosh)
India Rupee: Rises as dollar index at 9-mo low post FOMC meet outcome
MUMBAI – The rupee rose against the dollar today as the dollar index plunged to a nine-month low after the US Federal Reserve Chair Jerome Powell signalled progress in the central banks’ fight against inflation, raising expectations among market participants that the Fed may end its rate hike campaign in the near term, dealers said.
The policymakers raised the interest rate by 25 basis points as the two-day Federal Open Market Committee meeting came to a close.
Powell said that “the disinflationary process has started”, but the committee was highly attentive to inflation risks as it seeks to bring the annual consumer price rise in line with its 2% target. He said the Fed will continue to make decisions on a meeting-by-meeting basis.
Meanwhile, The US Automatic Data Processing survey on Employment Change showed that the private sector added 106,000 new positions in January, lower than the 178,000 expected and way below the 253,000 added in December. Furthermore, the ISM Manufacturing Purchasing Managers Index for the same month came in at 47.4, lower than the market expectations of 48.
At 0938 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 100.92 as against 101.21 on Wednesday. It was at 102.1 on Tuesday. The index fell to a nine-month low of 100.82 in early trade.
Market participants now await the policy outcomes of the European Central Bank and the Bank of England today, where they are expected to hike the interest rate by 50 bps.
However, dealers said that the Indian unit will be under pressure due to likely dollar purchases by banks for foreign portfolio outflows, due to Adani Enterprises Ltd’s move to withdraw its 200-bln-rupee follow-on public offering, as announced on Wednesday.
Adani Enterprises, the flagship company of the Adani Group, made the announcement following fluctuation in the company’s stock and with a view to protect investors from financial losses.
Dealers have pegged technical support for the rupee at 82.00 a dollar. The rupee is seen at 81.60-82.00 for the rest of the day, dealers said. (Aiswarya Santhosh)
India Rupee – Asia FX: Rises as dollar index slumps on FOMC outcome
NEW DELHI – Asian currencies rose against the US unit as the dollar index slumped to a nine-month low after the US Federal Reserve Chair Jerome Powell pointed at the progress made in the central bank’s fight against inflation. This led to market expectation that the end to Fed’s rate hikes is near.
The US Fed raised policy rate by another 25 basis points at the end of its two-day policy meeting, which was in line with market expectation. Further, Powell said the central bank remained vigilant towards inflation risks, while also acknowledged that “the disinflationary process has started”.
At 0925 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 100.90 as against 101.22 on Wednesday. It was at 102.10 on Tuesday. The index fell to as much as 100.82 in early trade.
Moreover, gains on the local share indices, tracking a rise in the Wall Street, also supported the Asian units. At 0925 IST KOSPI and Hang Seng indices were up 0.7% and 0.6%, respectively.
Most of the Asian currencies rose in the range of 0.3%-1% against the US unit today. The South Korean won and Philippine peso were 1% higher against the greenback, and emerged as the biggest gainer among its peer. (Ananya Chaudhuri)
India Rupee: Expected range for rupee – Feb 2
MUMBAI – Following are the expected support and resistance levels for the rupee today, as forecasted by leading banks and brokerages in an Informist poll:
(Aiswarya Santosh)
End
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Ashish Shirke
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