Informist, Monday, Feb 28, 2022
By Arushi Jain
MUMBAI – The rupee recovered most losses against the US unit today as several banks persistently sold dollars on behalf of exporters who wanted to take advantage of relatively higher dollar/rupee levels, dealers said.
“Exporters sold (dollars) aggressively at today’s levels of around 75.50-75.60/$1,” said a dealer with a state-owned bank. “Given the uncertainty of markets, exporters rushed to cover their positions today, which is why we saw a sharp movement in the rupee.”
The rupee settled at 75.3400 a dollar today against 75.2900 a dollar at 1530 IST on Friday. The local currency had fallen to as much as 75.7500 a dollar in early trade.
Some foreign banks also stepped in to sell dollars for foreign fund inflows into Indian companies, and in anticipation of inflows from foreign portfolio investors for Life Insurance Corp of India’s upcoming initial public offering, dealers said.
The LIC IPO is likely to raise $8 bln and will open for anchor investors on Mar 11 and a few days later for other investors, as per reports.
These dollar sales further supported the rupee, dealers said.
Moreover, some dealers said state-owned banks also stepped in to sell dollars on behalf of the Reserve Bank of India, which wanted to prevent sharp depreciation in the local currency. However, other dealers doubted whether these dollar sales were on behalf of the central bank.
A sharp rise in the domestic benchmark equity indices also supported the local unit, said dealers. The Nifty 50 and the Sensex ended nearly 0.8% and 0.7% higher, respectively.
Today, the rupee touched the day’s high of 75.2900 a dollar.
The local unit had opened sharply lower at 75.7100 a dollar today because the safe-haven US unit strengthened globally as investors worldwide grappled with increased geopolitical uncertainties, including new sanctions against Russia by Western countries, said dealers.
Several countries imposed sanctions on Russia, for its military action against Ukraine. The sanctions have targeted banks and wealthy individuals, including the removal of “selected Russian banks” from the SWIFT international payments system.
At 1625 IST, the dollar index, which measures the strength in the US currency against a basket of six major currencies, was at 97.05, against 96.54 on Friday. It was at 97.14 on Thursday.
It had risen to as much as 97.42 earlier today.
However, the dollar index came off earlier highs in European trade today, which led some banks to sell dollars on behalf of traders who wanted to cover their existing bets placed in favour of the US currency. This further supported the rupee, according to dealers.
Dealers said a sharp rise in the prices of Brent crude amid heightened fears that oil supply from Russia, among the world’s top producers of the commodity, could be disrupted, also weighed on the local currency.
At 1625 IST, the April contract of Brent crude on the Intercontinental Exchange was at $102.75 per barrel, against the previous close of $97.93 per bbl. Prices had risen to as much as $105.07 per bbl today.
FORWARDS
Premium on the dollar/rupee forwards contract rose slightly today as banks bought forward dollar contracts on behalf of importers, dealers said.
On an annualised basis, the premium on the one-year, exact-period dollar/rupee contract was at 4.07%, against 4.05% on Friday. The premium was 306.61 paise compared with 305.24 paise on Friday.
OUTLOOK
Domestic markets will be shut on Tuesday on account of Maha Shivratri.
On Wednesday, the rupee may take opening cues from overnight movement in the dollar index as market participants will continue to monitor developments related to Russia and Ukraine, said dealers.
Dealers said sharply elevated prices of Brent crude oil are expected to dampen sentiment for the local currency.
During the day, the rupee is seen in range of 75.2000-75.7000 a dollar.
India Rupee: Falls; dollar, crude surge as Ukraine crisis worsens
MUMBAI – The rupee fell against the dollar today because the safe-haven US unit surged as investors worldwide grappled with increased geopolitical uncertainties, including new sanctions against Russia by Western countries, according to dealers.
The US, Canada, the UK, the European Union, Australia and Japan were among the countries that imposed sanctions on Russia for its military action in Ukraine. The sanctions target banks and wealthy individuals. “Selected Russian banks” have also been removed from the SWIFT international payments system.
At 1055 IST, the dollar index, which measures the strength in the US currency against a basket of six major currencies, was at 97.37, against 96.54 on Friday. It was at 97.14 on Thursday.
Moreover, a sharp rise in prices of Brent crude oil, due to heightened fears that oil supplies from Russia could be disrupted, also weighed on sentiment for the local unit. Rise in oil prices increases India’s import bill, which dampens sentiment for the rupee.
At 1055 IST, the April contract of Brent crude on the Intercontinental Exchange was at $102.96 per barrel, against the previous close of $97.93 per bbl. Prices had risen to as much as $105.07 per bbl earlier today.
A sharp fall in local share indices further dented sentiment for the Indian unit, dealers said. At 1055 IST, the Nifty 50 and Sensex were nearly 0.5% lower each.
However, the rupee recovered some of its earlier losses as foreign banks stepped in to sell dollars likely for foreign fund inflows into Indian companies, dealers said.
Some dealers said banks sold dollars also on behalf of exporters who wanted to take advantage of relatively higher dollar/rupee levels of around 75.74-75.70 a dollar.
“Selling (of dollars) was expected around these levels and it is likely to continue through the day,” said a dealer with a state-owned bank. “I think the Reserve Bank of India will also step in to sell dollars if the rupee seems to depreciate around the 76/$1 levels.”
For the rest of the day, the rupee is seen at 75.4000-75.9000 a dollar. (Arushi Jain)
India Rupee: Expected range for rupee – Feb 28
MUMBAI – The following are the expected support and resistance levels for the rupee, as forecasted by leading banks and brokerages in an Informist poll:
(Arushi Jain)
India Rupee – Asia FX: Down as Ukraine crisis worsens, crude surges
MUMBAI – Most Asian currencies fell against the dollar as mounting crisis between Ukraine and Russia dented investor sentiment globally.
The safe-haven dollar gained after Western countries imposed fresh sanctions on Russia, for its military action in Ukraine, which target banks and wealthy individuals, including the removal of “selected Russian banks” from the SWIFT international payments system.
Rise in crude oil prices also weighed on Asian currencies, the energy commodity futures rose nearly 5% in early trade due to heightened fears that oil supplies from Russia could be disrupted.
The Thai Baht and the South Korean won slumped 0.8% and 0.5%, respectively. (Richard Fargose)
End
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Avishek Dutta
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