India Rupee Review:Dn as rise in COVID cases weighs on recovery hopes

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Wednesday, Jul 8

 

By Akansha Victor

MUMBAI – The rupee closed lower against the US dollar amid persisting worries over the rising count of COVID-19 cases globally, which has cast a shadow over hope of a relatively quick economic rebound, dealers said. 

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Some foreign banks were among major buyers of the US currency, likely for clients, dealers said. Weakness in domestic equities also weighed on the Indian currency. 

 

After rising to as high as 74.85 per dollar today, the rupee closed at 75.0150 a dollar. On Tuesday, the rupee was at 74.9350 per dollar at 1400 IST. 

 

The dollar/rupee currency pair traded in a narrow range today, as volumes were lower than usual in the absence of fresh triggers, dealers said. 

 

The dollar strengthened globally as investors resorted to buying safe-haven . This lifted the dollar index, which measures the strength of the greenback against a basket of six major currencies, to as high as 97.05, compared with 96.88 late on Tuesday.

 

Investors are concerned that authorities in several parts of the world may have to roll back or delay reopening their economies. Australia has already reimposed lockdown measures in its second biggest city of Melbourne.

 

Three US Federal Reserve officials said data showed a “levelling off” of economic activity, both in terms of businesses reopening and mobility.  

 

The continued rise in COVID-19 cases may affect consumer spending in the world’s largest economy at a time when expiry of some stimulus programmes is due by the end of this month. According to reports, the US has nearly 3 mln coronavirus cases and almost 123,000 deaths. 

 

On Tuesday, a  official said it won’t be surprising if the COVID-19 death toll begins to rise again, as it takes weeks after contracting the virus to get seriously ill and possibly succumb to the disease. 

 

Today, exporters were said to have sold dollar at 75.05 per dollar, limiting further losses in the rupee, dealers said. Hope of foreign fund inflows in the coming days also helped the rupee hold its ground, they added. 

 

Investments by multiple foreign companies into Reliance Industries’ subsidiary Jio Platforms are expected this week as well. Multiple investors have collectively acquired over 25% stake in the digital company. With Intel Capital being the latest investor, the total investments into Jio Platforms are around 1.17 trln rupees.

 

Investors hope for more fiscal stimulus from governments across the globe, which may increase dollar liquidity in markets and lift the appetite for riskier assets. 

 

Comments by US Federal Reserve Vice-Chairman Richard Clarida in an interview on Tuesday led to hope of another stimulus plan by the Fed to bolster in the US. Clarida said there was “no limit” on the extent of bond purchase by the US central bank, and that the Fed could ease further with forward guidance, according to reports. 

 

 

1400 IST

1000 IST

HIGH

LOW  

PREVIOUS

(AT 1400 IST)

75.0150

74.8500

74.8500

75.0450

74.9350

 

FORWARDS MARKET

The premium on the one-year dollar/rupee forwards contract fell today as some banks and exporters sold dollars for forward delivery at higher levels, dealers said.

 

volumes in the forwards segment were low in the absence of any significant directional triggers, dealers said.

 

Earlier this week, the premium on the one-year contract rose to the highest level in nearly two months on the back of purchases of the greenback for forward delivery, likely on behalf of the Reserve Bank of , dealers said.

 

Typically, the RBI transacts in the forwards market to neutralise the impact of its interventions in the spot market on rupee liquidity in the banking system.

 

Currency traders are of the view that the rupee may be constricted to a range of 74.60-75.20 a dollar in the coming days, given the expectations of foreign fund inflows into Reliance Industries’ subsidiary Jio Platforms on one hand, and the RBI’s dollar-buying interventions on the other.

 

On an annualised basis, the premium on the one-year exact-period dollar/rupee contract settled at 3.93% today, against the previous close of 3.95%. The one-year month-end dollar/rupee contract ended at 285.50 paise, against the previous close of 288.00 paise.

 

OUTLOOK

On Thursday, the rupee may take cues from the dollar index and developments related to COVID-19 globally, dealers said.

 

“Unless there is some big news and either side breaks out, I think it (dollar/rupee) will move between 74.80-75.20 for some time,” said a dealer with a big state-owned bank. 

 

Expectations of foreign fund inflows and sales of the greenback by exporters at higher dollar/rupee levels may support the rupee. But sharp appreciation in the Indian unit is expected to be limited by the RBI’s dollar-buying intervention in the spot market, dealers said.

 

The central bank is expected to buy dollars around 74.80 per dollar, according to dealers. 

The rupee is likely to move in the range of 74.80-75.20 a dollar on Thursday. 


 

India Rupee – World FX: Most currencies fall on COVID-19 worry

 

 

AT 1535 IST

HIGH

LOW

PREVIOUS

GBP/USD 

1.2521 1.2568 1.2509 1.2549

EUR/USD 

1.1273 1.1294 1.1262 1.1274

NZD/USD 

0.6535 0.6562 0.6530 0.6544

AUD/USD 

0.6938 0.6953 0.6928 0.6945

USD/JPY 

107.5000 107.7140 107.4280 107.5390

USD/CAD 

1.3603 1.3624 1.3585 1.3606

EUR/JPY 

121.2250 121.4472 121.1370 121.2500

CHF/USD 

1.0615 1.0632 1.0601 1.0603

EUR/CHF 

1.0616 1.0633 1.0615 1.0623

 

 

MUMBAI – Most major currencies were under pressure against the US dollar today on the back of increased demand for the safe-haven greenback due to concern that resurgence of COVID-19 cases, particularly in the US, may slow down economic recovery.

 

Total number of COVID-19 cases in the US crossed the 3-mln mark on Tuesday as more states reported record number of new infections. Texas and California, the two largest states, recorded the biggest jump in new cases with more than 10,000 each.

 

At 1535 IST, the dollar index, which measures strength of the greenback against a basket of six major currencies, was at 96.98, compared with 96.88 late on Tuesday.

 

The Japanese yen and the euro were flat against the US unit today, while the commodity-linked currencies such as the Canadian dollar, the Australian dollar and the dollar remained on a week footing.

 

Losses in the pound sterling were limited due to expectation that the UK would announce measures to prevent a full-blown unemployment crisis later today.

 

UK Finance Minister Rishi Sunak, in his new budget speech today, is expected to include a 2-bln-pound sterling fund to create work placement for unemployed people in the 16-24 age bracket for six months.

 

Sunak may also reduce tax on purchase of property, which could revive the UK housing market. He may also announce allocation of 3 bln pound sterling to improve efficiency of homes that would support more than 100,000 jobs.   (Mimansa Verma)


India Rupee – F&O: Dollar/rupee rises as Indian unit dn in spot mkt

 

  AT 1350 IST OPEN HIGH LOW

PREVIOUS CLOSE

Spot dollar/rupee

 

74.9950

 

74.8500 75.0450 74.8500

 

74.9350

 

1-month futures on NSE

 

75.1450

 

75.0525 75.2150 74.9725

 

75.0525

 

1-month futures on BSE 75.1550 75.0625 75.2175 74.9725 75.0575
1-month futures on MSEI 75.1700 75.0375 75.2075 74.9975 75.0800

 

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

 

Rupee fell as the global risk appetite declined  due to worry over the continued surge in COVID-19 cases and its impact on the pace of global economic recovery, especially in the US, dealers said. 

 

Open interest in the contract was down 0.44%.

 

JULY FUTURES NSE BSE   MSE
Volume 1,057,650 495,289 14,734
Open interest 1,847,466 2,466,297 30,492

(Akansha Victor)


India Rupee: Premiums falls as banks, exporters sell forward dollars

 

 

AT 1335 IST

OPEN

HIGH

LOW

PREVIOUS

Spot rupee

per $1

74.9600

74.7000

74.8500

75.0450

74.9350

1-year fwd premium
(exact period)

3.91%

3.95%

3.96%

3.90%

3.95%

 

MUMBAI–1320 IST–Premium on the one-year dollar/rupee forwards contract fell today as some banks and exporters sold dollars for forward delivery at higher levels, dealers said.

 

On an annualised basis, premium on the one-year exact-period dollar/rupee contract was 3.92%, against the previous close of 3.95%. At 1320 IST, the one-year month-end dollar/rupee contract was at 284.50 paise, against the previous close of 288.00 paise.

 

Trade volumes in the forwards segment were low in the absence of any solid directional triggers, dealers said.

 

Earlier this week, premium on the one-year contract rose to the highest level in nearly two months on the back of purchases of the greenback for forward delivery, likely on behalf of the Reserve Bank of India, dealers said.

 

Typically, the RBI transacts in forwards market to neutralise the impact of its interventions in the spot market on rupee liquidity in the banking system.

 

Currency traders are of the view that the rupee may be constricted in the range of 74.60-75.20 a dollar in coming days, given the expectations of foreign fund inflows into Reliance Industries’ subsidiary Jio Platforms on one hand, and the RBI’s dollar-buying interventions on the other.

 

For the rest of the day, premium on the one-year exact-period dollar/rupee forwards contract is seen at 3.94-3.98%.  (Mimansa Verma)


India Rupee – NDF:Dollar/rupee up as US currency strengthens globally

MUMBAI – The dollar/rupee rate for one-month offshore non-deliverable forwards contract rose today tracking strength in the US currency globally.

 

At 1220 IST, the contract was at 75.17, compared with 75.13 late Tuesday.

 

The dollar index, which measures the strength of the US unit against a basket of six major currencies, rose to as high as 97.05, compared with 96.88 late Tuesday.

 

The safe-haven dollar strengthened as investors grew more anxious about the rise in coronavirus cases and the impact it would have on the pace of global economic recovery. There are concerns that the authorities in several parts of the world may have to roll back or delay reopening of their economies. Australia has already reimposed lockdown measures in its second biggest city of Melbourne.

 

Three US Federal Reserve officials said high frequency data showed a “levelling off” of economic activity both in terms of businesses reopening and mobility. The drastic rise in COVID-19 cases in the US may affect consumer spending, at a time when some stimulus programmes are close to expiry by the end of this month. The US has nearly 3 mln coronavirus cases and almost 123,000 deaths, according to reports. (Akansha Victor)


India Rupee: Steady on mixed cues; cos’ dlr sales near 75/$1 support

 

  At 1100 IST 1000 IST HIGH LOW

PREVIOUS

(at 1400 IST)

Spot rupee per $1 74.9450 74.8500 74.8500 74.99 74.9350

 

MUMBAI–1100 IST–The rupee was largely steady against the US dollar as market sentiment remained fragile because of mixed cues.

 

Rupee pared initial gains as some foreign banks and private banks purchased dollars, likely for clients, dealers said.

 

“Some people may have also placed long bets (on dollar) as there is still slight risk aversion,” said a dealer with a private bank.

 

Market players refrained from placing large bets in favour of the rupee as they expect the Reserve Bank of India to purchase the greenback near 74.80 per dollar, dealers said.

 

On the other hand, sales of the greenback by exporters near 75.00 per dollar limited losses in the rupee, dealers said.

 

Dealers expect dollar inflows for investments by foreign entities into Reliance Industries’ subsidiary Jio Platforms to hit the currency market this week as well.

 

Over the past couple of months, multiple foreign companies have collectively acquired over 25% stake in the digital company. With Intel Capital being the latest investor, the total investments into Jio Platforms are around 1.17 trln rupees.

 

Though there are hopes of more fiscal stimulus from governments across the globe, the surge in COVID-19 cases has cast a shadow over hopes of a relatively quick economic rebound.

 

Comments by US Federal Reserve Vice Chairman Richard Clarida in an interview on Tuesday led to hope of another stimulus plan by the Fed to bolster economic growth in the US. This may also support the rupee.

 

According to media reports, Clarida said there is “no limit” on the extent of bond-purchase by the US central bank, and that the Fed could ease monetary policy further with forward guidance.

 

However, investors are concerned that rising virus cases would force more regions across the world to roll back or delay reopening of their economies.

 

Comments by some other Fed officials painted a bleak picture as they said high frequency data showed a “levelling off” of economic activity both in terms of businesses reopening and mobility.

 

The US has nearly 3 mln coronavirus infections and almost 123,000 deaths, according to reports. Rising coronavirus cases in the US may affect investor confidence about economic recovery, especially when some stimulus programmes are nearing expiry by the end of this month.

 

Dealers expect the currency pair to move in a range of 74.70-75.05 a dollar during the day.  (Akansha Victor)


India Rupee: Technical levels for rupee – Jul 8

 

MUMBAI – At 1000 IST, the rupee was at 74.8500 a dollar, compared with 74.9350 a dollar at 1400 IST on Monday. At 1025 IST, the rupee was at 74.9400 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 75.06 75.17 74.78 74.69
Big state-owned bank 75.02 75.15 74.85 74.78
State-owned bank 75.02 75.20 74.80 74.68
Private bank 75.04 74.80 74.71

 

(Akansha Victor)


India Rupee – Asia FX:Mixed; worry over surge in COVID-19 cases weigh

 

MUMBAI – Asian currencies traded on a mixed note today with worries that the surge in coronavirus cases may delay recovery in the global economy.

 

Investors were concerned that rising cases would force more regions across the world to roll back or even delay reopening of their economies. 

 

Comments by some US Federal Reserve officials also painted a bleak picture as they said the high frequency data showed a “levelling off” of economic activity both in terms of businesses reopening and mobility. 

 

Raphael Bostic, the president of the Federal Reserve Bank of Atlanta, said some signs “might suggest that the trajectory of this recovery is going to be a bit bumpier than it might otherwise.” 

 

Cleveland Federal Reserve President Loretta Mester said, “We saw a reopening in May and activity starting to come back pretty well. Over the past week or so, there’s been some levelling off, and I think it’s probably due to the increase in cases not only in Ohio but across the country.” 

 

The US has nearly 3 mln coronavirus infections and almost 123,000 deaths, according to reports.

 

Tensions between the US and China also kept investors on the edge as some reports said President Donald ’s administration may be considering fresh measures against Chinese officials and technology companies. 

 

The Chinese yuan was under pressure as the People’s Bank of China set the dollar-yuan central parity rate lower at 7.0207 today. 

 

The Thai baht was the worst performing currency in Asia, while the Indonesian rupiah was largely steady against the greenback.  (Akansha Victor)


India Rupee: Expected range for rupee – Jul 8

 

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 75.10 74.70
Big state-owned bank 75.05 74.65
State-owned bank  75.10 74.80
Big private bank 75.08 74.65
Private bank 75.00 74.70

 

(Mimansa Verma)

End

 

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

 

Edited by Avishek Dutta

 

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Send comments to feedback@cogencis.com

Source: Cogencis

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