Informist, Thursday, Mar 31, 2022
By Pratiksha and Srijonee Bhattacharjee
NEW DELHI/MUMBAI – Despite purchases of the greenback by oil marketing companies through the day, the rupee rose against the US unit on the last day of financial year due to persistent sales of the dollar by corporates, dealers said.
Exporters were said to have sold the greenback in large quantum before closing their accounts at the end of the financial year, according to dealers.
After moving within a range of nearly 18 paise through the day, the rupee settled at 75.7875 a dollar as against 75.9100 a dollar on Wednesday. The rupee appreciated 0.2% against the dollar today.
The Indian rupee opened stronger for the third day in a row at 75.7150 a dollar but was pushed to the day’s low of 75.8250 a dollar due to continued purchases of the US unit by some state-owned banks on behalf of oil marketing companies, dealers said.
Oil importers wanted to lock in on the fall in prices of crude oil today, given the unforeseeable nature of the war between Russia and Ukraine.
Crude prices have been on the rise since Russia’s invasion of Ukraine last month. They hit the highest level since 2008 of $139.13 a bbl on Mar 7, after Western nations imposed sanctions on Russia, a major supplier of oil.
Today, crude oil prices fell sharply on announcement that the US government is considering the release of about 1 mln barrels of oil per day from the strategic petroleum reserve for several months, in order to tame prices amid the ongoing Russia-Ukraine war. According to reports, the total release may be as much as 180 mln bbl.
The development comes ahead of a meeting go the Organization of the Petroleum Exporting Countries and its allies later today. The alliance, which includes Russia, is likely to stick to its existing deal of gradually increasing oil production, as per reports.
At 1621 IST, the June contract of Brent crude was at $105.50 a bbl on the Intercontinental Exchange as against the previous close of $111.44 per bbl. Prices fell to $105.10 a bbl earlier today.
However, the rupee then rose to 75.6900 a dollar after some exporters sold the greenback in significant quantum, dealers said.
“The selling (of dollars) started at the 75.80 (a dollar) level,” said a dealer with a state-owned bank. “The market was seeing the 75.65 (a dollar) resistance level. If the rupee had breached that level, stop losses would’ve triggered.”
Some foreign banks were also said to have sold dollars for foreign fund inflows into Indian companies that further supported the Indian unit, thereby, pushing it to the day’s high of 75.65 a dollar.
The Indian currency traded in the 75.68-75.72 a dollar range during the final hours of the trading session. However, towards the end of the day, some oil importers purchased dollars after which the rupee closed at 75.7875 a dollar.
Falling domestic equity indices also dampened sentiment for the local currency. The Nifty 50 and Sensex ended down over 0.2% each.
According to dealers, traders today avoided taking long positions ahead of the extended weekend.
Money market will be closed on Friday due to annual account closure of banks.
FORWARDS
Premiums on dollar/rupee forward contracts rose because state-owned banks bought the greenback for forward delivery, dealers said.
State-owned banks bought the greenback on behalf of the central bank in order to support the premium from falling below the support level of 3.75%
Premium on the one-year, exact-period dollar/rupee contract was at 285.63 paise as against 285.22 paise on Wednesday.
The premiums fell to as low as 283.38 paise earlier because banks sold the greenback for forward delivery on the view that the US-India interest rate will narrow further, given talks of aggressive rate hikes in the US.
OUTLOOK
Money market will be closed on Friday due to annual account closure of banks.
On Monday, the rupee will take opening cues from movement in the dollar index and Brent crude oil prices amid the ongoing Russia-Ukraine crisis, said dealers.
Dealers have now pegged key technical support for the rupee at 76.00 a dollar.
During the day, the rupee is seen in range of 75.5000-76.1000 a dollar.
India Rupee: Premiums on fwd dlr/rupee off lows on buys by PSU bks
MUMBAI – Premiums on dollar/rupee forward contracts were off their lows because state-owned banks bought the greenback for forward delivery, dealers said.
State-owned banks bought the greenback on behalf of the central bank in order to support the premium from falling below the support level of 3.75%
Premium on the one-year, exact-period dollar/rupee contract was at 285.13 paise as against 285.22 paise on Wednesday.
The premiums fell to as low as 283.38 paise earlier because banks sold the greenback for forward delivery on the view that the US-India interest rate will narrow further, given talks of aggressive rate hikes in the US. (Srijonee Bhattacharjee)
India Rupee: Sharply up as crude oil slumps, domestic equities rise
NEW DELHI – The rupee surged against the dollar today because prices of crude oil fell after reports said that the US government is considering releasing 1 mln barrels of oil per day for several months from the strategic reserve, dealers said.
A fall in oil prices decreases India’s import bill, which supports sentiment for the rupee.
At 1030 IST, the June contract of Brent crude was at $106.30 a bbl on the Intercontinental Exchange as against the previous close of $111.44 per bbl. Prices fell to $105.71 a bbl earlier today.
A rise in domestic equity indices also supported sentiment for the Indian unit, according to dealers. At 1030 IST, the Nifty 50 and Sensex were up 0.2% each.
“I think the rupee will move in a similar range as yesterday’s. The tone of the market is buying (of dollars) on dips, but we are also expecting some selling (of dollars) during the second half of the trading session,” said a dealer with a state-owned bank.
The rupee is seen at 75.5000-76.1000 a dollar for the rest of the day. (Pratiksha)
India Rupee – Asia FX: Mixed as risk-off sentiment prevails; oil down
MUMBAI – Asian currencies were mixed against the dollar today on a risk-off sentiment due to diminished hopes for progress in the Russia-Ukraine peace talks.
Investor optimism over potential deescalation in the Russia-Ukraine war faded as Russia’s offensive against Kyiv raged on, and peace talks stalled.
Less than a day after Russian officials said the talks with their Ukrainian counterparts were constructive, the former stepped up attacks around Kyiv and in the eastern regions of Ukraine.
Ukraine President Volodymyr Zelensky also warned that they need to remain vigilant about Russia’s intention.
These developments revealed uncertainties over the prospect of a peace deal between Russia and Ukraine which weighed on investor sentiment.
However, a sharp fall in crude oil prices and the dollar index supported the Asian currencies.
Among Asian currencies, the South Korean won and Taiwan dollar fell 0.1-0.2%. The Philippine peso gained 0.2%. (Richard Fargose)
India Rupee: Expected range for rupee – Mar 31
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 Arshad Hussain
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