Informist, Friday, Jan 7, 2022
By Pratiksha and Arushi Jain
NEW DELHI – The rupee ended sharply up against the dollar because the US unit weakened globally in European trade ahead of the release of US non-farm payrolls data later today, said dealers.
The crucial data is expected to provide further clues on the US Federal Reserve’s pace of tightening its monetary policy and also on the state of economic recovery in the US, dealers said.
At 1610 IST, the dollar index, which measures the strength of the US currency against a basket of six major currencies, was at 96.11 compared with 96.32 on Thursday. It was at 96.17 on Wednesday.
After moving within a narrow range of nearly 14 paise throughout the day, the rupee settled at 74.3100 a dollar against 74.4900 a dollar at 1530 IST on Thursday. The local unit had opened up at 74.3550 a dollar today.
The US currency had surged against other major currencies after the hawkish minutes from the Fed’s Dec meeting, released on Thursday, firmed up investors’ expectations that the US central bank could raise interest rates at a faster pace this year, said dealers.
Federal Reserve Bank of St. Louis President James Bullard said on Thursday that the Fed could begin increasing the policy rate as early as its March meeting in order to be better-positioned to control inflation.
Further, San Francisco Fed President Mary Daly said the central bank should raise interest rates this year, given the “very strong” labour market and high inflation acting as a “repressive tax” that acts as a burden, particularly on the poor.
Moreover, sentiment for the rupee was also boosted due to a rise in domestic equity indices, said dealers. The Nifty 50 and the Sensex ended nearly 0.4% and 0.2% higher, respectively.
Meanwhile, trade volumes in currency markets were lower than usual today as traders refrained from placing fresh bets due to the re-imposition of strict COVID-19 restrictions across the country amid a surge in the number of COVID cases, said dealers.
“Trade volumes were very thin today because banks are functioning at bare minimum capacity due to COVID-19 restrictions,” said a dealer with a state-owned bank.
Back home, India reported 117,100 fresh COVID-19 cases today, over 28% higher than Thursday’s number.
World Health Organization chief Tedros Adhanom Ghebreyesus said on Thursday that while Omicron does appear to be less severe compared to the Delta variant, especially in those vaccinated, it does not mean it should be categorised as mild.
On the flip side, the local unit touched the day’s low at 74.3750 a dollar during the day because some foreign banks stepped in to purchase dollars for foreign fund outflows from Indian equities, said dealers.
“There was some buying (of dollars) at the 74.26-74.27/$1 level today,” said another dealer with a state-owned bank. “However, the buying (of dollars) was minimal, so the rupee retreated in some time.”
The rupee rose to the day’s high of 74.2400 a dollar today.
FORWARDS
The premium on the dollar/rupee forwards contract rose today due to dollar purchases by banks for forward delivery on behalf of importers, dealers said.
On an annualised basis, the premium on the one-year, exact-period dollar/rupee contract was at 4.65%, compared with 4.62% on Thursday. The premium was at 345.60 paise compared with 344.31 paise on Thursday.
OUTLOOK
On Monday, the rupee may take opening cues from overnight movement in the dollar index after the release of US non-farm payroll data on Friday, said dealers.
The local currency may also take opening cues from movement in the prices of Brent crude oil, dealers said.
Dealers have now pegged key technical resistance for the rupee at 74.2500 a dollar.
During the day, the rupee is seen at 74.2000-74.6000 a dollar.
India Rupee: Rises as dollar comes off highs, equities strengthen
NEW DELHI – The rupee rose against the dollar today because the US unit came off earlier highs globally ahead of the release of the US non-farm payroll data later today, said dealers.
The data could provide further clues on the US Federal Reserve’s pace of tightening its monetary policy and also on the state of economic recovery in the US, dealers said.
At 1035 IST, the dollar index, which measures the strength of the US currency against a basket of six major currencies, was at 96.2 compared with 96.32 on Thursday. It was at 96.17 on Wednesday.
Moreover, a sharp rise in domestic and Asian equity indices also supported the local unit, said dealers. At 1035 IST, the Nifty 50 and the Sensex were nearly 0.9% higher each.
“If the rupee breaks the 74.25/$1 level, it might even appreciate up to 74.10/$1 today,” said a dealer with a state-owned bank.
Dealers have now pegged immediate key technical resistance for the rupee at 74.2500 a dollar.
The rupee is seen in a range of 74.2000-74.6500 a dollar during the day. (Pratiksha)
India Rupee: Expected range for rupee – Jan 7
NEW DELHI – The following are the expected support and resistance levels for the rupee, as forecasted by leading banks and brokerages in an Informist poll:
(Pratiksha)
End
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Snigdha Kuttikat
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