India Rupee Review: Down on worry over virus; FX inflows limit fall

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Wednesday, Jul 1

 

By Akansha Victor

MUMBAI – The settled lower against the US today as market players were cautious due to rising cases of coronavirus across the world, especially in the US, and the reimposition of containment curbs in some regions, dealers said. 

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Dealers speculated that purchases of the greenback by some big state-owned banks on behalf of the Reserve Bank of India, near 75.50 per dollar, also weighed on the rupee.

 

“At these levels, even importers start covering because they know that RBI will not let rupee appreciate that much,” said a dealer with a state-owned bank. “Market was quite dull today. It moved in a very narrow range… basically, people were going long around 75.50 (per dollar) and cutting their positions around 75.58 (per dollar).”

 

After the currency pair moved in the 11-paise range for most of the day, the Indian unit closed at 75.5900 a dollar, compared with 75.5000 at 1400 IST on Tuesday.

 

Today, market players refrained from placing large bets in the absence of significant triggers in the domestic currency market, dealers said.

 

While the Reserve Bank of India is said to have been curbing significant rise in the rupee through its dollar-buying interventions in the spot market, foreign fund inflows have helped the rupee hold its ground, dealers said.

 

“Foreign banks were selling aggressively, we could see that even towards the end. The talk of Reliance flows has been in the market for some time now,” the dealer said.

 

Among the major inflows that have helped the rupee are the massive foreign investments into Reliance Industries Ltd’s subsidiary Jio Platforms Ltd. The Carlyle Group has reportedly announced of $235 mln for about 25% stake in Nxtra Data Ltd, a wholly-owned subsidiary of Bharti Airtel Ltd.

 

But, at the same time, concerns over a gloomy global economic outlook kept investors on edge, dealers said. With containment curbs being reimposed in some areas, investors are afraid that if new infections keep surging, more regions would be forced to take such measures.

 

Such moves could hit the prospects of global economic recovery, dealers said. 

 

Australia, which had reportedly managed to limit the spread of COVID-19 earlier, imposed a partial lockdown in the capital city of Melbourne for a month from today. Back home, section 144 was imposed in Mumbai today until July 15, as the financial capital continues to report the highest number of virus cases in the country.

 

According to Maharashtra’s public health department, there were 174,761 confirmed COVID-19 cases in the state as on Monday, of which 77,658 alone were from Mumbai.

 

Last week, states such as California, Texas and Florida in the US imposed stringent measures after a significant rise in cases.

 

 

1400 IST

1000 IST

HIGH

LOW  

PREVIOUS

(AT 1400 IST)

75.5900

75.5100

75.4800

75.5950

75.5000

 

FORWARDS MARKET

The premium on the one-year dollar/rupee forward contract ended marginally lower today as exporters sold the greenback for forward delivery, dealers said. 

 

Trade volumes in the forwards segment were muted today due to the lack of significant cues, dealers said. 

 

On an annualised basis, the premium on the one-year exact-period dollar/rupee contract ended at 3.83%, compared with 3.84% at the previous close. The one-year month-end dollar/rupee contract closed at 289.00 paise, as against 290.50 paise at the previous close.

OUTLOOK

On Thursday, the rupee may track global developments related to COVID-19 and movement in the dollar index in overnight trade, dealers said. 

 

Investors keenly await the minutes and economic forecast of the US Federal Open Market Committee meeting and the country’s manufacturing purchasing managers’ index for June, due later today. 

 

In case of significant appreciation in the rupee due to foreign exchange inflows, market players expect the RBI’s dollar-buying intervention around 75.40 a dollar to limit a sharp rise in the Indian currency.

 

The rupee is likely to move in the range of 75.40-75.80 a dollar on Thursday.


India Rupee – F&O: Dollar/rupee off lows as spot rupee weakens

 

  AT 1350 OPEN HIGH LOW

PREVIOUS CLOSE

Spot dollar/rupee

 

75.5800

 

75.5100 75.5950 75.4800

 

75.5000

 

1-month on NSE

 

75.7600

 

75.7125  75.7950 75.6800

 

75.7850

 

1-month futures on BSE 75.7600 75.7025 75.7950 75.6750 75.7850
1-month futures on MSEI 75.7200 75.7250 75.7700 75.6875 75.7800

 

MUMBAI – The one-month dollar/rupee July contract was off its lows today as the Indian unit fell against the US dollar in the spot market, dealers said.

 

Open interest in the contract was up 2.93%.

 

JULY FUTURES NSE BSE   MSE
Volume 578,599 412,249 6,576
Open interest 1,675,851 2,190,441 15,134

(Akansha Victor)


 

India Rupee – NDF: Dlr/rupee off lows tracking rupee in onshore mkt

MUMBAI – The dollar/rupee rate for the one-month offshore non- forwards contract was off lows, aligning with rates in the onshore market, where the rupee weakened against the US dollar. 

 

At 1325 IST, the one-month dollar/rupee offshore contract was at 75.72, compared with 75.73 on Tuesday. It had fallen to a low of 75.66 earlier in the day.

 

In the onshore market, the rupee was at 75.77 a dollar today. The rupee edged lower, as a surge in COVID-19 cases offset any hope of a quick economic recovery globally, with fears that containment curbs could be reimposed.

 

While foreign banks were said to have sold dollars, likely for foreign fund inflows, purchases of the greenback by some state-owned banks weighed on the rupee, dealers said. Some dealers speculated these purchases were on behalf of the Reserve Bank of India. 

 

“People are inclined to go long (on dollars)… the market is very dull. In case it breaks 75.60 (per dollar) it can go till 75.63, but I don’t expect much movement for today. On the downside (of dollar/rupee) 75.50 (per dollar) is a strong level,”  said a dealer with a big state-owned bank. (Akansha Victor


 

India Rupee: Edges lower on COVID-19 fears; trade volumes subdued

 

  At 1120 IST 1000 IST HIGH LOW

PREVIOUS

(at 1400 IST)

Spot rupee per $1 75.5500 75.5100 75.4800 75.5700 75.5000

 

MUMBAI–1120 IST–The rupee edged lower against the dollar today because global market players grew jittery over rising number of COVID-19 cases, which may derail economic recovery in the US, dealers said. Moreover, that the Reserve Bank of India may stand in the way of rupee’s appreciation also weighed on it.

 

On Tuesday, the number of COVID-19 cases surged by 47,000 in the US, recording its biggest single-day spike since the pandemic began. This raised fears that states in the US may re-impose lockdown restrictions to contain the spread of the infection. 

 

Last week, California, Texas and Florida imposed stringent measures after significant rise in cases. Australia has also imposed a partial lockdown in Melbourne in an attempt to limit the spread.

 

In Japan, data released earlier today showed that manufacturing index in June had fallen to its lowest level in 11 years, to (-)34.0, compared with (-)8.0 in the previous month.

 

Such worries stirred caution among market players, resulting in a global rise in the greenback in Asian trade. This, in turn, weighed on the Indian currency. 

 

Conflicting cues for the domestic currency market has discouraged to place any big bet on the greenback, dealers said.

 

While foreign fund inflows and exporters’ dollar sales have supported the rupee around 75.60 a dollar this week, any meaningful trade opportunity fizzled out due to heavy dollar-buying interventions by the central bank around 75.45 a dollar, they added.

 

“I don’t think there is going to be much selling at fix (dollar/rupee reference) rate today,” said a dealer with a big private bank. “…market is not going anywhere in the last few sessions. There is no interest to trade in this market, I guess!”

 

Foreign fund inflows for investments into Reliance Industries Ltd’s subsidiary Jio Platforms Ltd has anchored the Indian currency above 75.65 a dollar this week. The Carlyle Group has also reportedly announced investment worth $235 mln for about 25% stake in Nxtra Data Ltd, a wholly-owned subsidiary of Bharti Airtel Ltd. 

 

For the rest of the day, dealers expect the currency pair to move in a range of 75.45-75.60 a dollar.  (Mimansa Verma)


India Rupee: Technical Levels for rupee – Jul 1

 

MUMBAI – At 1000 IST, the rupee was at 75.5100 a dollar, compared with 75.5000 a dollar at 1400 IST on Tuesday. At 1030 IST, the rupee was at 75.5500 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 75.62 75.72 75.45 75.40
Big state-owned bank 75.63 75.74 75.41 75.34
State-owned bank 75.56 75.63 75.45 75.40
Big private bank 75.58 75.67 75.45 75.39
Private bank 75.65 75.73 75.43 75.35
Private bank 75.59 75.65 75.45 75.40

 

(Mimansa Verma)


India Rupee – Asia FX: Mixed; worry over surge in virus cases weighs

 

MUMBAI – Asian currencies traded on a mixed note due to optimism about better-than-expected US data and an alarming rise in the COVID-19 cases in the US. 

 

In US, Chicago’s Purchasing Managers’ Index rose to 36.6 in June, after falling to a 38-year low of 32.3 in the previous month. The US consumer confidence index also rose to 98.1 in June from a revised 85.9 in May.

 

Investors worldwide also hoped for more stimulus measures from governments and central banks.

 

On Tuesday, US Treasury Secretary  said the administration is committed to “working with the House and the Senate so we can pass (relief) legislation by the end of July.”

 

Anthony Fauci, head of US’ National Institute of Allergy and Infectious Diseases, said new cases in the country could rise to 100,000 a day if social distancing norms were not exercised seriously. 

 

The Malaysian ringgit rose following data that indicated an expansion in the manufacturing activity in June. Markit Manufacturing PMI for Malaysia was at 51.0 in June from 45.6 in the previous month.  (Akansha Victor)


India Rupee: Expected range for rupee – Jul 1

 

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 75.45
State-owned bank 75.80 75.50
Big private bank  75.67 75.45
Private bank 75.60 75.40

 

(Mimansa Verma)

 

End

 

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

 

Edited by Charumathi Sankaran

 

Cogencis Tel +91 (22) 6619-0000

Send comments to feedback@cogencis.com

Source: Cogencis

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