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Wednesday, December 6, 2023

India Rupee Review: RBI dlr sales hold rupee steady amid FX outflows

Informist, Thursday, Sep 21, 2023

 

By Kabir Sharma

 

MUMBAI – The rupee ended steady against the dollar as banks’ dollar buys for outflows for foreign funds and oil companies offset their dollar sales on behalf of the Reserve Bank of India, dealers said.

 

“Some oilers (oil companies) were there and outflows from equities, otherwise it was a range-bound market,” a dealer with a big state-owned bank said.  

 

After opening higher against the greenback, the rupee moved in a narrow range of 7 paise against the dollar for most part of the day and closed at 83.0900 a dollar against Wednesday’s close of 83.0725 a dollar. 

 

The rupee opened largely steady against the dollar despite the dollar index rising to a fresh six-month high as banks sold the greenback likely on behalf of the Reserve Bank of India, dealers said. 

 

Banks sold the US currency at around 83.10-a-dollar level in the domestic spot market likely on behalf of the RBI to prevent the Indian currency from falling beyond the record low level of 83.29 a dollar, dealers said.  

 

Dealers speculated banks might have also sold the greenback in the offshore non-deliverable forwards market likely on behalf of the RBI, which further supported the local unit.

 

Around 30 minutes before opening today, the Indian unit was quoted at around 83.17-83.19 against the greenback in the offshore market. However, the rupee opened 10 paise higher at 83.0900 against the dollar.

 

The dollar index remained firm at a six-month high after US Federal Reserve officials’ projections indicated that interest rates in the world’s largest economy will stay higher for longer, which weighed on the rupee. 

 

On Wednesday, the US Federal Reserve held its benchmark federal funds rate steady at 5.25-5.50%, in line with market expectation.

 

Following the hawkish pause, the dollar index rose to a fresh six-month high. At 1355 IST, the index, which gauges the strength of the greenback against its major peers across the world, was at 105.46 as against 105.33 on Wednesday. It was at 105.13 on Tuesday. The index scaled to a high of 105.69 in early trade today.

 

Some foreign banks bought the Indian unit for foreign fund outflows from Indian equities, which also weighed on the Indian unit, dealers said. 

 

“This situation reflects a battle between bullish factors (such as a stronger US dollar index, higher bond yields, increasing oil prices, foreign portfolio investment outflows, and a widening trade deficit) and bearish factors (RBI intervention, foreign direct investment inflows, exporter sales near record highs, and robust economic fundamentals),” said Amit Pabari, managing director, CR Forex. 

 

Crude oil prices also eased from their 10-month-high after the outcome of the Federal Open Market Committee meeting, which prompted oil companies to stock up on the commodity, fuelling demand for dollars. This also weighed on the Indian unit, dealers said. 

 

Now, market participants await the Bank of Japan’s interest rate decision, scheduled for on Friday.

 

Japan’s central bank is widely expected to keep its key interest rate unchanged at (-)0.1% on Friday. Market participants will monitor Bank of Japan Governor Kazuo Ueda’s comments for hints about any chance of a change in its current ultra-loose policy in the future. 

 

 AT 1645 ISTAT 0900 ISTHIGHLOWPREVIOUS(AT 1530 IST)Spot rupee per $183.090083.090083.020083.167583.07251-year dlr/rupee fwd (paise)148.33149.83149.83141.67149.00

 

FORWARDS

Premiums on one-year dollar/rupee forwards ended lower today, tracking a surge in the US treasury yields. 

 

US Treasury yields surged after the US Federal Open Market Committee’s outcome late Wednesday. While the panel held interest rates as expected, US Federal Reserve officials suggested they would hike rates one more time in 2023 and keep rates high next year as well, with only a cumulative 50-basis-point rate cut expected in 2024.

 

Yield on the benchmark 10-year US Treasury note rose to 4.42%, as against 4.35% at the time of Indian market close on Wednesday.

 

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

 

The premium on the one-year dollar/rupee contract was 148.33 paise, against 149.00 paise on Wednesday. On an annualised basis, the premium was at 1.78%, flat against the previous close.

 

OUTLOOK

On Friday, the rupee will take cues from movement in the dollar index and crude oil prices, dealers said. 

 

“Tomorrow (Friday), rupee is expected to be in the range of 83.00 to 83.30 as RBI protects one end and oil and FPIs keep buying dollars for their requirements,” said Anil Kumar Bhansali, head of treasury and executive director, Finrex Treasury Advisors LLP. 

 

Dealers have pegged key technical support for the rupee at 83.30 a dollar. During the day, the rupee is seen in the range of 83.00-83.50 a dollar.

India Rupee – World FX: Dlr up on Fed’s hawkish pause; yen surges

 

 AT 1605 ISTHIGHLOWPREVIOUSGBP/USD 1.22941.23461.22821.2343EUR/USD 1.06571.06651.06171.0664NZD/USD 0.59200.59510.59020.5931AUD/USD 0.64020.64520.64010.6447USD/JPY 147.8890148.4610147.8870148.1990USD/CAD 1.35051.35071.34591.3457EUR/JPY 157.6000158.0680157.3810158.0110CHF/USD 1.10481.11321.10141.1127EUR/CHF 0.96450.96790.95640.9579

 

MUMBAI – The dollar gained strength against almost all major currencies post the US Federal Open Market Committee’s projection to raise the benchmark interest rate by 25 basis points by December, while keeping the current fed funds target rate unchanged in the range of 5.25%-5.50%.

 

Following the Fed’s decision, the dollar index, which measures the strength of the greenback against a basket of six major currencies, rose to a six-month high of 105.69. At 1553 IST, it was at 105.50, against 105.33 on Wednesday and 105.13 on Tuesday. 

 

The Japanese yen rose 0.26% to 147.95 a dollar as of 1606 IST. Japan will take any step to address excess volatility in its currency, a senior government spokesperson told Reuters today.

 

The US Federal Reserve on Wednesday maintained its hawkish stance, which led to a drop in almost all major currencies. The yen was down to 148.39 against the dollar, near the psychologically crucial mark of 150.

 

The two-day policy meeting of Japan’s central bank is scheduled to end on Friday. The chief cabinet secretary of Japan has said he hopes the central bank will take “appropriate” policy steps to achieve the inflation target of 2%. The statement came after US Treasury Secretary Janet Yellen signalled that any intervention by Japan should be to smoothen the volatility in the yen, rather than influencing the exchange rate.

 

The Swiss franc fell the most among major currencies, falling 0.73% against the dollar. It was followed closely by the Australian dollar, which was down 0.70%.

 

The pound sterling fell 0.45% against the greenback ahead of the Bank of England’s monetary policy outcome later today. Inflation in the UK cooled more than expected in August, causing traders to rapidly reel in bets that the Bank of England will hike rates again, releasing pressure from the pound sterling. (Sourabh Kumar and Vaishali Tyagi) 

India Rupee: In thin band; dlr buys for FX outflows weigh on rupee

 

 AT 1356 ISTAT 0900 ISTHIGHLOWPREVIOUS(AT 1530 IST)Spot rupee per $183.125083.090083.020083.167583.0725

 

MUMBAI – The rupee remained in a narrow range against the dollar as banks’ dollar purchases for foreign fund outflows from domestic equities was offset by their dollar sales likely on behalf of the Reserve Bank of India. After the initial surge, the rupee has traded in a range of 7 paise so far. 

 

Banks bought the greenback for outflows from domestic equities, which weighed on the Indian unit, dealers said. At 1347 IST, the Nifty 50 and the Sensex were down 0.8% and 0.9%, respectively.

 

Dealers said state-owned banks persistently sold the greenback on behalf of the RBI in order to prevent the rupee from falling beyond its record low of 83.29 a dollar, which supported the rupee. 

 

Around 30 minutes before opening today, the Indian unit was being quoted at 83.17-83.19 against the greenback in the offshore market. However, the rupee opened 10 paise higher at 83.0900 against the dollar. 

 

The dollar index remained firm globally after US Federal Reserve officials’ projections indicated that interest rates in the world’s largest economy will stay higher for longer, which weighed on the rupee. 

 

On Wednesday, the US Federal Reserve held its benchmark federal funds rate steady at 5.25-5.50%, in line with market expectations.

 

Following the hawkish pause, the dollar index rose to a fresh six-month high. At 1355 IST, the index, which gauges the strength of the greenback against its major peers across the world, was at 105.46 as against 105.33 on Wednesday. It was at 105.13 on Tuesday. The index scaled to a high of 105.69 in early trade today.

 

Dealers see key immediate technical support for the rupee at 83.30 a dollar. During the day, the rupee is seen in the range of 83.00-83.30 a dollar. (Kabir Sharma)

India Rupee:Steady despite firm dlr index; RBI’s likely dlr sales aid

 

 AT 0954 ISTAT 0900 ISTHIGHLOWPREVIOUS(AT 1530 IST)Spot rupee per $183.075083.090083.020083.120083.0725

 

MUMBAI – The rupee opened largely steady against the dollar today despite the dollar index rising to a fresh six-month high as banks sold the greenback likely on behalf of the Reserve Bank of India, dealers said. 

 

“RBI is intervening in spot, but rupee should be under pressure throughout the day,” said a dealer with a brokerage firm.

 

Banks sold the US currency at around 83.10-a-dollar level in the domestic spot market likely on behalf of the RBI in a bid to prevent the Indian currency from falling beyond the record low level of 83.29 a dollar, dealers said.  

 

“RBI will sell (dollar) around 83.20 (a dollar) level again,” a dealer at a private bank said. “We’re expecting it (rupee) to move between the 83.00-83.30 (a dollar) level.” 

 

Dealers speculated banks might have also sold the greenback in the offshore non-deliverable forwards market likely on behalf of the RBI, which further supported the local unit.

 

Around 30 minutes before opening today, the Indian unit was being quoted at around 83.17-83.19 against the greenback in the offshore market. However, the rupee opened 10 paise higher at 83.0900 against the dollar. 

On Wednesday, the US Federal Reserve held its benchmark federal funds rate steady at 5.25-5.50%, in line with market expectations. However, Fed officials’ projections indicated that interest rates are going to stay higher for longer in the world’s largest economy.

 

The Fed’s hawkish pause and guidance of “higher for longer” comes in the backdrop of a resilient US economy. The central bank described the economy’s expansion as “solid” instead of “moderate”, the word it had used in July. Fed officials also revised up their federal fund target range projections by 50 basis points from the June policy review to 5.00-5.25% by the end of 2024.

 

Following the hawkish pause, the dollar index rose to a fresh six-month high. At 0956 IST, the dollar index, which gauges the strength of the greenback against its major peers across the world, was at 105.58 as against 105.33 on Wednesday. It was at 105.13 on Tuesday. The index scaled to a high of 105.69 in early trade today.

 

Further, crude oil prices fell as much as 1% to a one-week low, which lent support to the local unit. At 0956 IST, the October contract of Brent crude oil on the Intercontinental Exchange was at $92.82 a bbl as against $93.53 a bbl on Wednesday. It was at $94.34 a bbl on Tuesday.

 

A fall in crude oil prices decreases India’s import bill, which subsequently supports the Indian currency.

 

Dealers see key immediate technical support for the rupee at 83.30 a dollar. During the day, the rupee is seen in the range of 83.00-83.30 a dollar. (Ananya Chaudhuri)

India Rupee- Asia FX: Down as dlr index rises on Fed’s hawkish pause

 

MUMBAI – Asian currencies fell against the dollar today as the dollar index rose to a fresh six-month high after the US Federal Reserve signalled one more rate hike by December end, while it kept federal funds rate unchanged in line with the market expectation. 

 

The US Fed held its benchmark federal funds rate steady at 5.25-5.50% on Wednesday at the end of its two-day policy review meeting. However, Fed officials’ projection indicated interest rates are going to stay higher for longer in the world’s largest economy.

 

Fed’s hawkish pause and guidance of “higher for longer” came in the backdrop of resilient US economy, which the central bank sees expanding at a solid pace while the unemployment rate remained low. “Broadly, stronger activity means we have to do more with rates, and that’s what that meeting is telling you,” Fed Chair Jerome Powell said.

 

Following the hawkish pause, the dollar index rose to a fresh six-month high. At 0913 IST, the dollar index, which gauges the strength of the greenback against its major peers across the world, was at 105.56 as against 105.33 on Wednesday. It was at 105.13 on Tuesday. The index scaled to a high of 105.69 in early trade today.

 

Asian currencies fell in the range of 0.1-0.8% against the US unit. The South Korean currency fell the most against the greenback and was down 0.8%. South Korean President Yoon Suk-yeol said in the United Nations General Assembly Wednesday that his country won’t stand idle in case Russia assisted North Korea to enhance weapons programme in exchange for its help in Ukraine war, reports said.

 

The Taiwanese dollar and Philippine peso fell 0.4% and 0.2% against the US currency. (Ananya Chaudhuri)

India Rupee: Expected range for rupee – Sep 21

 

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 bank83.3582.95State-owned bank83.5083.10Foreign bank83.3082.95Private bank83.4083.00Brokerage firm 83.3283.02

 

 

 

 

 

 

 

 

(Ananya Chaudhuri)

 

End

 

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

 

Edited by Akul Nishant Akhoury

 

 

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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Source: Cogencis

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