India Rupee Review: Off highs as RBI buys dlrs, risk appetite wanes

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Tuesday, Jun 30

 

By Mimansa Verma

MUMBAI – The Indian rupee ended off the day’s highs against the US dollar today because major state-owned banks purchased the greenback around the technical resistance of 75.45 a dollar in early trade, likely on behalf of the Reserve Bank of India, dealers said.

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Moreover, global risk appetite turned sour in European trade after China passed the national security legislation for Hong Kong earlier today, which is seen jeopardising the region’s autonomy and special status as a financial hub.

 

After moving in a 6-paise range for most of the day, the Indian currency closed at 75.5000 a dollar, compared with 75.5825 at 1400 IST on Monday.

The imposition of the security law on Hong Kong by China may prompt retaliation from the US. Last month, US Donald Trump had warned about suspending Hong Kong’s preferential trade status if Beijing goes ahead with the law that strips the region of its autonomy. 

 

The Global Times reported earlier in the day that the legislation will come into effect on Jul 1.

 

Global strength in the safe-haven greenback also weighed on the Indian currency, dealers said. The , which measures strength of the US unit against a basket of six major currencies, rose to a high of at 97.78, compared with 97.54 late on Monday.

 

Back home, currency traders were of the view that the central bank’s heavy dollar-buying interventions and the fragile state of the Indian economy signal a towards depreciation in the rupee.

 

This discouraged any big bets in favour of the Indian currency, even though some foreign banks sold dollars for foreign investments into Reliance Industries Ltd’s subsidiary Jio Platforms, dealers said.

 

The central bank has added $11.8 bln to its foreign currency reserves this month so far, taking the total to $505.56 bln in the week ended Jun 19, according to data on RBI’s website. 

 

players across the globe have been cautiously optimistic about economic recovery, given the of monetary stimulus by major central banks on one hand, and resurgence of COVID-19 cases on the other. 

 

Earlier today, data released in China showed manufacturing Purchasing Manager’s Index rose to 50.9 in June, compared with market expectations of 50.4. In May, the index was at 50.6. The key data point showed economic activity is gaining traction, which supported Asian currencies including the Indian rupee.

 

US Federal Reserve Chair Jerome Powell said on Monday the outlook for the US economy was still “extraordinarily uncertain,” and signalled more monetary stimulus may be needed going ahead.

 

Moreover, data released in the US on Monday showed the index for home sales jumped to 99.6 in May, marking the largest month-on-month increase ever.

 

Overnight developments brought some cheer for riskier assets in Asian trade, but soon fizzled out and weighed on the Indian unit.

 

Traders refrained from placing large bets on the greenback ahead of Prime Minister Narendra Modi’s address at 1600 IST today. This comes amid rising tensions with China after a violent face-off between Indian and Chinese troops near the Line of Actual Control in Galwan Valley, eastern Ladakh. 

 

Trade volumes in the currency market were subdued today due to truncated trading hours and strong presence of the central bank at lower dollar/rupee levels, dealers said.

 

 

1400 IST

1000 IST

HIGH

LOW  

PREVIOUS

(AT 1400 IST)

75.5000

75.4750

75.4500

75.5700

75.5825

 

FORWARDS MARKET

The premium on the one-year dollar/rupee forward contract ended marginally lower today because exporters sold the greenback for forward delivery amid lack of significant triggers, dealers said.

 

Trade volumes in the forwards segment were low, dealers said.

 

Some banks were said to have purchased the US currency for forward delivery on the view that the rupee may not sustain the rise given the Reserve Bank of India’s heavy dollar purchases around technical resistance of 75.45 a dollar.

 

On an annualised basis, the premium on the one-year exact-period dollar/rupee contract ended at 3.84%, compared with 3.85% at the previous close. The one-year month-end dollar/rupee contract closed at 289.00 paise, against 290.50 paise at the previous close. 

OUTLOOK

On Wednesday, the rupee may take opening cues from global developments related to COVID-19 and movement in the dollar index in overnight trade, dealers said. 

 

Investors await testimony by Powell and US Treasury Secretary  to the House Financial Services Committee on response to the pandemic, and a couple of data releases in the US for further cues on health of the economy, dealers said.

 

Foreign banks are expected to sell the greenback, likely for overseas inflows into Jio Platforms, dealers said. However, the RBI may purchase the greenback around 75.40 a dollar to limit sharp rise in the Indian currency.

 

The rupee is likely to move at 75.40-75.70 a dollar on Wednesday.


India Rupee – F&O:Dollar/rupee steady as spot rupee pares most gains

 

  AT 1355 IST OPEN HIGH LOW

PREVIOUS CLOSE

Spot dollar/rupee

 

75.5050

 

75.4750 75.5700 75.4500

 

75.5825

 

1-month futures on NSE

 

75.7275

 

75.6900 75.7775 75.6250

 

75.6950

 

1-month futures on BSE 75.7275 75.6525 75.7775 75.6250 75.6925
1-month futures on MSEI 75.7200 75.7000 75.7700 75.6350 75.8075

 

MUMBAI – The one-month dollar/rupee July contract was steady today because the Indian currency pared most gains against the greenback in the spot market, dealers said. 

 

Open interest in the contract was down 0.32%.

 

JULY FUTURES NSE BSE   MSE
Volume 785,488 449,655 13,617
Open interest 1,683,409 2,091,111 15,122

(Mimansa Verma)


India Rupee: Premiums slightly lower as exporters sell fwd dollars

 

 

AT 1340 IST

OPEN

HIGH

LOW

PREVIOUS

Spot rupee

per $1

75.5400

75.4750

75.4500

75.5700

75.5825

1-year fwd premium
(exact period)

3.83%

3.84%

3.84%

3.82%

3.85%

 

MUMBAI–1340 IST–The premium on the one-year dollar/rupee forward contract edged lower today because exporters sold the greenback for forward delivery amid lack of significant triggers, dealers said.

 

On an annualised basis, the premium on the one-year exact-period dollar/rupee contract was 3.83%, compared with 3.85% at the previous close. At 1340 IST, the one-year month-end dollar/rupee contract was at 289.00 paise, against 290.50 paise at the previous close. 

 

Trade volumes in the forwards segment were low, dealers said.

 

Some banks were said to have purchased the US currency for forward delivery on the view that the rupee may not sustain the rise given the Reserve Bank of India’s heavy dollar purchases around technical resistance of 75.45 a dollar.

 

In the spot market, the rupee pared most of its gains against the greenback because major state-owned banks purchased dollars, likely on behalf of the RBI, dealers said. Some importers were also said to have purchased the US unit. 

 

For the rest of the day, the premium on the one-year exact-period dollar/rupee forwards contract is seen at 3.80-3.85%.  (Mimansa Verma)


India Rupee – NDF:Dlr/rupee off lows tracking global dollar strength

MUMBAI – The dollar/rupee rate for the one-month offshore non-deliverable forwards contract recovered from its lows today tracking rise in the greenback against a basket of major currencies.

 

At 1240 IST, the one-month dollar/rupee offshore contract was at 75.67, compared with 75.71 on Monday. It had fallen to a low of 75.64 earlier in the day. The dollar index, which measures strength of the US currency against six major currencies, was at 97.71, as against 97.54 late Monday.

 

The dollar gained against a basket of major currencies in pre-European trade because market players turned jittery about imposition of Hong Kong Security Bill by China today, which may prompt retaliation from the US over the region’s status as the financial hub.

 

The Global Times reported earlier in the day that the legislation will come into effect on Jul 1.

 

Last month, US President Donald Trump had warned about suspending Hong Kong’s preferential trade status if Beijing goes ahead with imposition of the law that strips the region of its autonomy. 

 

Even though upbeat manufacturing data out of China in Asian trade soothed market earlier, a spike in coronavirus cases globally marred the optimism surrounding swift economic recovery, and in turn supporting the safe-haven greenback.  (Mimansa Verma)


India Rupee: Off highs; mkt speculates RBI bought dlrs near 75.45/$1

 

  At 1110 IST 1000 IST HIGH LOW

PREVIOUS

(at 1400 IST)

Spot rupee per $1 75.5175 75.4750 75.4500 75.5425 75.5825

 

MUMBAI–1110 IST–The rupee retreated from its highs against the dollar today because some major state-owned banks purchased the greenback around a technical resistance level of 75.45 a dollar, likely on behalf of the Reserve Bank of India, dealers said.

 

A few other dealers attributed these purchases of the US currency for importers amid thin trade volumes.

 

Though market players anticipate foreign fund inflows for investments into Reliance Industries Ltd’s subsidiary Jio Platforms Ltd to hit the currency market through the week, caution over rising cases of COVID-19 and persistent dollar-buying interventions by the central bank discouraged any bet in favour of the rupee, dealers said. 
 

Dealers are of the view that RBI may not want the Indian currency to rise sharply above a technical resistance level of 75.20 a dollar in the coming days, possibly to maintain trade competitiveness with major trading partners.

 

The central bank has added $11.8 bln to its foreign currency reserves this month so far, taking it to $505.56 bln in the week ended Jun 19, according to data on RBI’s website.

 

Currency market players across the globe have been cautiously optimistic about economic recovery, given the expectations of monetary stimulus by major central banks on one hand, and resurgence of COVID-19 cases on the other. Another risk for the Indian currency is simmering tensions between the US and China, dealers said. 

 

The Indian currency gained earlier in the day tracking the Chinese yuan that strengthened after data released in the country showed manufacturing activity picked up in June. The manufacturing Purchasing Manager’s Index rose to 50.9 in June, compared with market expectations of 50.4. In May, the index was at 50.6. 

 

Further, US Federal Reserve Chair Jerome Powell said on Monday that the outlook for the US economy was still “extraordinarily uncertain,” and signalled more monetary stimulus may be needed going ahead.

 

Data released in the US on Monday showed the index for home sales jumped to 99.6 in May, marking the largest month-on-month increase ever.

 

Traders await Prime Minister Narendra Modi’s address at 1600 IST today. This comes amid rising tensions with China after a violent face-off between Indian and Chinese troops near the Line of Actual Control in Galwan Valley, eastern Ladakh. 

 

For the rest of the day, dealers expect the currency pair to move in a range of 75.40-75.60 a dollar.  (Mimansa Verma)


India Rupee: Technical Levels for rupee – Jun 30

 

MUMBAI – At 1000 IST, the rupee was at 75.4750 a dollar, compared with 75.5825 a dollar at 1400 IST on Monday. At 1020 IST, the rupee was at 75.4575 per dollar.

 

Following are key support and resistance levels for the rupee as predicted by leading banks and brokerages:

 

  S1 S2 R1 R2
Big state-owned bank 75.60 75.35
State-owned bank 75.60 75.40 75.35
Big private bank 75.62 75.70 75.45 75.36
Private bank 75.60 75.69 75.35 75.26

 

(Mimansa Verma)


India Rupee – Asia FX:Yuan rises most as China mfg activity picks up

 

MUMBAI – Most Asian currencies were higher against the US dollar today, with the Chinese yuan leading gainers after the release of upbeat manufacturing data in the country today.

 

Data showed manufacturing Purchasing Manager’s Index rose to 50.9 in June, compared with market expectations of 50.4. In May, the index was at 50.6. The key data point suggests economic growth is gaining traction.

 

Further, expectations of monetary support by the US Federal Reserve also buoyed market sentiment. On Monday, Federal Reserve Chair Jerome Powell said the outlook for the US was still “extraordinarily uncertain,” and signalled more monetary stimulus may be needed going ahead.

 

Late on Monday, data released in the US showed the index for home sales jumped to 99.6 in May, marking the largest month-on-month increase ever. The index was at 69.0 in the previous month.

 

While the Thai baht and Taiwan dollar remained steady against the greenback, the Indonesian rupiah bucked the trend.

 

The rupiah fell by 0.3% as market players grew concerned after Indonesian President Joko Widodo strongly condemned the inefficiency of his Cabinet ministers to tackle the coronavirus .

 

With more than 55,000 cases and over 2,800 deaths due to COVID-19, Indonesia ranks the highest in South East Asian countries.  (Mimansa Verma)


India Rupee: Expected range for rupee – Jun 30

 

MUMBAI – Following are expected support and resistance levels for the rupee, as forecast by leading banks and brokerages in a Cogencis poll:

 

 

SUPPORT

RESISTANCE

Big state-owned bank

75.60

75.35

State-owned bank

75.60

75.40

Big private bank 

75.70

75.45

Private bank

75.65

75.35

Brokerage firm

75.75

75.30

 

(Mimansa Verma)

 

End

 

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

 

Edited by Aditya Sakorkar

 

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Send comments to feedback@cogencis.com

Source: Cogencis

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