Informist, Wednesday, Apr 27, 2022
By Pratiksha and Srijonee Bhattacharjee
NEW DELHI – The rupee pared losses and rose against the US dollar today due to persistent sales of the greenback for foreign fund inflows, dealers said
The rupee bounced back from the day’s low of 76.7425 a dollar to settle at 76.5325 a dollar today.
The Indian unit opened 11 paise lower at 76.6700 a dollar today, against 76.5800 a dollar on Tuesday, as the dollar index rose to its highest level since the COVID-19 pandemic began, and is set for its best month since 2015, dealers said.
Prospects of aggressive interest rate hikes in the US, and investors’ move towards safe-haven assets in view of slowing economic growth in China and Europe gave the US currency a boost.
Concerns about China’s growth have increased with the financial hub of Shanghai under strict lockdown to deal with COVID-19 for around a month now.
At 1640 IST, the dollar index, which measures the value of the greenback against six major currencies, was at 102.58, against 102.30 on Tuesday. It was at 101.75 on Monday. The dollar index has grown stronger by about 7% so far in 2022.
The rupee then traded in a narrow range of 76.62-76.69 a dollar for a duration of almost four hours, supported by a large state-owned bank’s greenback sales for foreign fund inflows, dealers said.
After this, the Indian currency was dragged to the day’s low of 76.7425 a dollar as the dollar index strengthened further in European trade, dealers said. The index rose to 102.78 today, its highest level since March 2020.
The local unit then retraced its path and was gradually pushed to 76.5900 a dollar on the back of state-owned banks’ persistent greenback sales for foreign fund inflows, according to dealers.
Towards the end of the trading session, the rupee rose to the day’s high of 76.5000 a dollar as some foreign banks continuously sold dollars for foreign fund inflows, dealers said.
“After the market opened, we saw selling (of dollars) around 76.65 (a dollar),” a dealer with a state-owned bank said. “There were nats selling (dollars) sporadically throughout the day. During the final hour, there was selling (of dollars) around 76.57 (a dollar).”
A fall in domestic share indices dampened sentiment for the Indian currency, dealers said. Both the Nifty 50 and Sensex ended 0.9% lower each.
FORWARDS
Premiums on dollar/rupee forwards rose because banks and some companies bought the greenback for forward delivery to lock in the fall in premiums post RBI’s swap auction on Tuesday, dealers said.
The premium on the one-year, exact-period dollar/rupee contract was at 294.58 paise, against 287.53 paise on Tuesday. On an annualised basis, the premium was at 3.83%, against the previous close of 3.75%.
A US-based bank was said to have bought dollars for delivery in a year in significant amount.
Premium on the one-year contract fell below the support level of 3.80% on Tuesday. Today, however, the levels rose back from below the support level.
Dealers said that banks also executed sell-buy swaps (sell dollars for immediate delivery and buy it back at a later date) ahead of the initial public offering of Life Insurance Corp that will open on May 4. Foreign investors would be executing such swaps when subscribing to the issuance in order to minimise the currency risk.
OUTLOOK
On Thursday, the rupee will take opening cues from overnight movement in the dollar index and Brent crude oil prices, said dealers.
Investors now await the US government data on oil inventories due later today.
Dealers have now pegged strong key technical support for the rupee at 76.80 a dollar.
During the day, the rupee is seen in range of 76.4000-76.8000 a dollar.
India Rupee – World FX: Euro slips to 5-year low against dollar
MUMBAI – The euro fell to a five-year low against the dollar as tensions continued to flare up between Russia and member countries of the North Atlantic Treaty Organization.
Russia’s Minister of Foreign Affairs Sergei Lavrov said that “NATO is in essence, is engaged in a war with Russia through a proxy and is arming that proxy.”
Russia has stopped supplying gas to Poland and Bulgaria, the two NATO and European Union members as the crisis in Ukraine deepened. The euro was 0.3% lower at $1.0607 at 1615 IST.
The dollar remains elevated due to mounting expectations of aggressive interest rate hikes by the US Federal Reserve in the coming months.
At 1615 IST, the dollar index, which measures the greenback’s strength against six major currencies, was at 102.52 as against 102.30 on Tuesday. (Richard Fargose)
India Rupee: Forward premiums rise from below crucial support level
MUMBAI – Premiums on dollar/rupee forwards rose today because banks and some companies bought the greenback for forward delivery to lock in on the fall in premiums post RBI’s swap auction on Tuesday, dealers said.
The premium on the one-year, exact-period dollar/rupee contract was at 294.58 paise, against 287.53 paise on Tuesday. On an annualised basis, the premium was at 3.83%, against the previous close of 3.75%.
A US based bank was said to have bought dollars for delivery a year later in significant amount.
Premium on the one-year contract fell below the support level of 3.80% on Tuesday. Today, however, the levels rose back from below the support level.
Dealers said that banks also executed sell-buy swaps (sell dollars for immediate delivery and buy it back at a later date) ahead of the initial public offering of Life Insurance Corp that will open on May 4. Foreign investors would be executing such swaps when subscribing to the issuance in order to minimise the currency risk.
(Srijonee Bhattacharjee)
[I] India Rupee -Asia FX: Most units down; South Korea won slips 0.9%
NEW DELHI – Most Asian currencies were down against the US dollar in early trade today as worries over slowing growth in China due to the COVID-19 lockdown and expectations that the US Federal Reserve will aggressively hike interest rates boosted demand for the safe-haven US currency.
The dollar index, which measures the value of the greenback against six major currencies, rose to 102.40 earlier today, its highest level since March 2020.
The South Korean won slipped the most, down 0.9%, tracking the sharp fall in local equities due to concerns over economic slowdown and inflation woes. (Richard Fargose)
India Rupee: Falls as dollar index at over 2-yr high, local shrs down
NEW DELHI – The rupee fell against the greenback today because the dollar index touched a fresh over two-year high, dealers said.
The dollar index rose as concerns about slowing growth in China and expectations that the US Federal Reserve will aggressively hike interest rates boosted demand for the safe-haven asset, dealers said.
The dollar index, which measures the value of the greenback against six major currencies, rose to 102.40 earlier today, its highest level since March 2020.
At 0930 IST, the dollar index was at 102.36, against 102.30 on Tuesday. It was at 101.75 on Monday.
Domestic and Asian share indices fell today tracking an overnight sell-off in the US stock market. This also weighed on the local unit, dealers said.
At 0930 IST, the Nifty 50 and Sensex were down 0.7% and 0.5%, respectively.
“I think it’s high time that the Reserve Bank of India intervenes (by selling of dollars), since nothing seems to be in support for the rupee. We are also expecting some support from inflows today,” a dealer with a state-owned bank said. “The 76.80 (a dollar) downside level should hold.”
Today, the Indian currency opened at 76.6700 a dollar, its lowest opening level against the greenback since Mar 9. Dealers have now pegged key technical support for the rupee at 76.90 a dollar.
The rupee is seen at 76.5000-76.9500 a dollar for the rest of the day. (Pratiksha)
India Rupee: Expected range for rupee – Apr 27
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:
End
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Avishek Dutta
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