Informist, Monday, Sep 25, 2023
By Kabir Sharma
MUMBAI – The rupee ended sharply lower against the dollar today as banks bought the greenback on behalf of importers, who feared further depreciation in the Indian unit, dealers said.
The rupee traded in a narrow range of 12 paise against the dollar today before closing at 83.1450 a dollar against Friday’s close of 82.9300 a dollar.
Traders feared further depreciation in the Indian unit as the initial euphoria over the inclusion of Indian government bonds in JPMorgan’s Global Bond Index – Emerging Markets suite fizzled out.
The rupee opened lower against the dollar as the dollar index was at a near six-month high after data showed that business activity in the US was more resilient than in other developed countries, dealers said.
Data from S&P Global showed the US flash composite purchasing manager’s index, which gauges both manufacturing and services activities, was at 50.1 this month, against the final reading of 50.2 in August. Even though the reading is barely above 50, which separates contraction and expansion, it is well above the reading in peer countries.
In Europe, the S&P Global flash Eurozone Composite PMI remained below the 50 mark. The S&P Global PMI rose to 47.1 this month from a 33-month low of 46.7 in August.
The dollar index has been consistently rising due to better-than-expected economic data from the US. At 1537 IST, the index, which gauges the strength of the greenback against its major peers, was at 105.64, as against 105.58 on Friday and 105.38 on Thursday. The index rose to a high of 105.78 on Friday.
The rupee slowly depreciated against the dollar throughout the day as importers stepped up their dollar purchases in the wake of rising crude oil prices and a globally firm greenback, dealers said.
Oil prices rose today as investors focused on a tighter supply outlook after Russia issued a temporary ban on oil exports while remaining cautious of further rate hikes that could dampen demand.
In the US, operating oil rigs fell by eight to 507 in the week ended Sep 22, their lowest since Feb 2022, despite higher prices, a Baker Hughes weekly report showed on Friday. This also supported crude prices.
Some dealers sold the greenback on behalf of exporters, which supported the Indian unit, dealers said.
“Initially there was some buying pressure but once it touched 83.15 selling (of dollars) pressure from the exporters came in,” a dealer at a state-owned bank said.
FORWARDS
Premiums on one-year dollar/rupee forwards rose to a near three-month high today as banks bought dollars for forward delivery, noting a huge deficit in liquidity in the banking system, dealers said.
Systemic liquidity stayed in huge deficit after advance tax and goods and services tax payments. At the end of trade on Friday, liquidity in the system was estimated to be in a deficit of 1.17 trln rupees, as against 1.48 trln rupees on Thursday. The liquidity deficit on Thursday was at the highest level since April 2019.
Some banks also booked forward contracts on behalf of importers on expectation that the rupee may fall further in the coming days, dealers said. Today, the rupee opened 12 paise lower at 83.05 a dollar, and at 1400 IST, it was at 83.11 a dollar.
A fall in US Treasury yields on Friday also supported the premiums, dealers said. US benchmark 10-year Treasury yields retreated on Friday from their highest levels in 16 years as investors waited for more economic data to provide further cues on future rate hikes.
Premiums on forwards of a currency pair are reflective of the interest rate differential between the two countries.
The premium on the one-year dollar/rupee contract was 151.17 paise, against 150.25 paise on Friday. On an annualised basis, the premium was at 1.81%, against the previous close of 1.80%.
OUTLOOK
On Tuesday, the rupee will take cues from movement in the dollar index and crude oil prices, dealers said.
“Indian rupee to be in a range of 82.95 and 83.30 tomorrow as FPI outflows and oil buying continue and Asian currencies remain on the weaker side of the curve. RBI to be keenly watched,” 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 82.80-83.30 a dollar.
India Rupee – World FX: Dlr firm; Canadian currency up on crude rise
MUMBAI – The dollar gained strength against almost all major currencies today after data showed business activity in the US was more resilient than in other developed countries.
The Swiss franc was the key loser and was down 0.29% against the dollar.
This is in the backdrop of stable economic data from the US, as the S&P Global’s flash composite purchasing manager’s index, which gauges both manufacturing and services activities, was at 50.1 this month, against 50.2 the previous month. Despite a slight drop in the numbers, it is still higher than other major developed economies.
The S&P Global flash Eurozone composite PMI for September came at 47.1, which is slightly higher than 46.7 last month.
The greenback also strengthened by 0.16% against the euro.
Globally, crude prices also saw an uptick.
The Canadian dollar put up a tough fight against the greenback, as it rose by 0.15%, aided by rising oil prices which provided support for the Canadian unit. Canada is a leading oil exporter to the US.
The pound sterling fell by 0.04% against the US unit after data showed UK PMI contracted for the second straight month indicating economic growth slowdown. Data showed on Friday that UK services PMI came at 47.2 in September against market expectations of 49.2. The services PMI was at 49.5 in August.
The dollar index, which measures the value of the greenback against a basket of six major currencies, was at 105.62 at 1630 IST, as against 105.58 on Friday and 105.38 on Thursday. (Sourabh Kumar and Vaishali Tyagi)
India Rupee: Premiums at near 3-mo high as liquidity in huge deficit
NEW DELHI – Premiums on dollar/rupee forwards rose to a near three-month high today as banks bought dollars for forward delivery, noting a huge deficit in liquidity in the banking system, dealers said.
“There’s a lot of paying in the market due to liquidity deficit,” said a dealer with a big state-owned bank. “There’s no other reason why we would see paying at such levels.”
Systemic liquidity stayed in huge deficit after advance tax and goods and services tax payments. At the end of trade on Friday, liquidity in the system was estimated to be in a deficit of 1.17 trln rupees, as against 1.48 trln rupees on Thursday. The liquidity deficit on Thursday was at the highest level since April 2019.
Some banks also booked forward contracts on behalf of importers on expectation that the rupee may fall further in the coming days, dealers said. Today, the rupee opened 12 paise lower at 83.05 a dollar, and at 1400 IST, it was at 83.11 a dollar.
A fall in US Treasury yields on Friday also supported the premiums, dealers said. US benchmark 10-year Treasury yields retreated on Friday from their highest levels in 16 years as investors waited for more economic data to provide further cues on future rate hikes.
Premiums on forwards of a currency pair are reflective of the interest rate differential between the two countries.
Market participants see strong technical support for the one-year dollar/rupee forward contract at 2.00%.
At 1400 IST, premium on the one-year, exact-period dollar/rupee forward contract was at 151.17 paise as against 150.25 paise at Friday’s close. On an annualised basis, the premium was at 1.81%, unchanged against its previous close. Premiums rose to a near three-month high of 1.82% earlier today. (Pratiksha)
India Rupee: In a thin band; dollar buys by importers weigh
MUMBAI – The rupee moved in a narrow range of 11 paise as dollar purchases by importers offset the impact of dollar sales by exporters, dealers said. Importers persistently bought the US currency as they expect the Indian currency to depreciate further, they said.
Moreover, the dollar index was near a six-month high on resilient US economic data, which weighed on the Indian currency, dealers said. At 1308 IST, the index, which gauges the strength of the greenback against its major peers, was at 105.60, as against 105.58 on Friday and 105.38 on Thursday. The index rose to a high of 105.78 on Friday.
“Not much movement in the market; actually, selling and buying (of dollars) are both there. Selling (of dollars) started when it (rupee) fell to 83.1450 (a dollar) level,” said a dealer at a private bank.
Some banks rushed to sell the US unit on behalf of exporters, which limited losses of the Indian currency, dealers said.
Gains in local share indices also supported the local currency, dealers said. At 1309 IST, the Nifty 50 and Sensex were both up 0.2%.
Dealers see key immediate technical support for the rupee at 83.20 a dollar. During the day, the rupee is seen in the range of 82.80-83.20 a dollar. (Ananya Chaudhuri)
India Rupee – Asia FX: Mixed; ringgit up post Malaysia CPI data
MUMBAI – Asian currencies were mixed against the dollar, even as the greenback remained near the six-month-high touched on Friday, after flash purchasing managers’ index data for the US.
Data from S&P Global showed the US flash composite PMI, which gauges both manufacturing and services activities, was at 50.1 this month, against the final reading of 50.2 for August. Even though the reading is barely above 50, which separates contraction and expansion, it is well above the reading in peer countries.
In Europe, the S&P Global flash Eurozone Composite PMI remained below the 50 mark. The S&P Global PMI rose to 47.1 this month from a 33-month low of 46.7 in August.
At 0900 IST, the dollar index, which gauges the strength of the greenback against its major peers, was at 105.57, against 105.58 on Friday and 105.38 on Thursday.
The Malaysian ringgit rose 0.11% against the greenback, after the country’s consumer price index showed a 2% rise on-year in August, in line with expectations.
The South Korean won rose 0.18% against the dollar after South Korea allowed offshore firms to participate in its foreign exchange market to attract more overseas investment. The revision will be implemented from Oct 4.
The Indonesian rupiah and the Thai baht fell 0.11% and 0.09% against the dollar, respectively. (Sourabh Kumar and Vaishali Tyagi)
India Rupee: Falls as dlr index at around 6-month high on firm US PMI
MUMBAI – The rupee fell against the dollar as the dollar index was at a near six-month high after data showed business activity in the US was more resilient than in other developed countries, dealers said.
Data from S&P Global showed the US flash composite purchasing manager’s index, which gauges both manufacturing and services activities, was at 50.1 this month, against the final reading of 50.2 in August. Even though the reading is barely above 50, which separates contraction and expansion, it is well above the reading in peer countries.
In Europe, the S&P Global flash Eurozone Composite PMI remained below the 50 mark. The S&P Global PMI rose to 47.1 this month from a 33-month low of 46.7 in August.
The dollar index has been consistently rising due to better-than-expected economic data from the US. At 0935 IST, the index, which gauges the strength of the greenback against its major peers, was at 105.58, as against 105.58 on Friday and 105.38 on Thursday. The index rose to a high of 105.78 on Friday.
A rise in crude oil prices due to a bleak supply outlook also weighed on the local unit, dealers said. At 0936 IST, the October contract of Brent crude oil on the Intercontinental Exchange was at $93.45 a barrel, as against $93.27 a bbl on Friday. It was at $93.3 a bbl on Thursday.
A rise in crude oil prices increases India’s import bill, which weighs on the local unit.
“We’re expecting it (rupee) to go down till 83.15-83.16 (a dollar) level today. Dollar index is up because of market sentiment,” a dealer at a state-owned bank said. “We’re also not expecting major selling (of dollars) today.”
Dealers see key immediate technical support for the rupee at 83.20 a dollar. During the day, the rupee is seen in the range of 82.80-83.20 a dollar. (Ananya Chaudhuri)
India Rupee: Expected range for rupee – Sep 25
MUMBAI – Following are the expected support and resistance levels for the rupee today, as forecasted by leading banks and brokerages in an Informist poll:
(Ananya Chaudhuri)
End
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Maheswaran Parameswaran
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