Informist, Thursday, Jun 2, 2022
By Pratiksha and Srijonee Bhattacharjee
NEW DELHI – The rupee fell against the dollar today amid a muted trading session, as foreign banks purchased the greenback on behalf of foreign institutional investors, dealers said.
The FII outflows were on account of an adjustment in global standard indices on May 12 by the MSCI, which added Jindal Steel & Power, AU Small Finance Bank, Tata Elxsi and Adani Power to its MSCI India index, some dealers said. HDFC Asset Management Co was excluded from the MSCI India index.
After moving within a narrow range of 9 paise throughout the day, the rupee ended at 77.6050 a dollar as against 77.5200 a dollar on Wednesday.
The rupee opened lower at 77.6000 a dollar, as the dollar index strengthened, tracking a rise in US Treasury yields, dealers said.
US Treasury yields jumped on expectations of aggressive rate hikes by the US Federal Reserve, as strong economic activity was seen giving more room for policy tightening, dealers said.
A report by the Institute for Supply Management showed US manufacturing activity picking up in May, as demand for goods remained strong even with rising prices. The index of national factory activity rebounded to a reading of 56.1 last month from 55.4 in April. A purchasing managers’ index reading above 50 denotes expansion in activity.
At 1610 IST, the dollar index, which measures the strength of the US currency against a basket of six major currencies, was at 102.24 compared with 102.50 on Wednesday. It was at 101.75 on Tuesday.
According to dealers, some foreign banks were said to have purchased dollars for foreign institutional investors, which pushed the rupee to the day’s low of 77.6350 a dollar.
However, trade volumes in the currency market were lower than usual, as traders stayed on the sidelines and avoided placing fresh bets in the absence of significant cues, dealers said.
“The trade was dull like the past few days. I think the US non-farm payroll data will be the next significant trigger for the market. After that, we might see some directional movement,” a dealer with a brokerage firm said.
US jobs report, including non-farm payrolls, is scheduled to release on Friday.
Meanwhile, prices of crude oil fell on reports that Saudi Arabia had signalled it was ready to ramp up supply to make up for any lag in Russian oil production due to western sanctions.
A fall in oil prices lowers India’s import bill, which supports sentiment for the rupee.
At 1610 IST, the July contract of Brent crude oil on the Intercontinental Exchange was at $113.58 a bbl against the previous close of $116.29 a bbl.
Gains in domestic equity indices also aided sentiment for the rupee. The Nifty 50 and the Sensex ended 0.6% and 0.8% higher, respectively.
After trading in a thin range of 77.55-77.61 a dollar for a majority of the trading session, the rupee closed at 77.6050 a dollar.
FORWARDS
Premiums on dollar/rupee forwards remained largely flat in the absence of significant triggers, dealers said.
The premium on the one-year, exact-period dollar/rupee contract was at 291.91 paise as against 291.51 paise on Wednesday. On an annualised basis, the premium was 3.76% as against the previous close of 3.74%.
OUTLOOK
On Friday, the rupee will take cues from overnight movement in Brent crude oil prices after the outcome of the monthly meeting of the Organization of the Petroleum Exporting Countries and its allies later today, dealers said.
The local unit will also take cues from overnight movement in the dollar index, dealers said.
Investors also await crude oil supply data from the US Energy Information Administration, due later today.
Dealers now see strong key technical support for the rupee at 77.70 a dollar and technical resistance at 77.30 a dollar.
During the day, the rupee is seen in the range of 77.40-77.80 a dollar.
India Rupee: Largely steady in absence of significant cues
NEW DELHI – The rupee remained largely steady against the greenback as traders stayed on the sidelines and avoided placing fresh bets due to a lack of significant cues, dealers said.
“The trade is dull even today. Exporters are also not coming in since they are expecting more attractive levels in near term,” a dealer with a state-owned bank said.
Dealers have now pegged immediate key technical support for the rupee at 77.70 a dollar.
For the rest of the day, the Indian unit is seen at 77.4000-77.7000 a dollar. (Pratiksha)
India Rupee – Asia FX: Most units down tracking surge in US yields
MUMBAI – Most Asian currencies fell against the greenback today tracking a sharp rise in US Treasury yields as aggressive rate hike fears mounted due to strong US manufacturing activity, which could enable the Fed to push up rates further without risking recession.
The US Purchasing Managers’ Index for manufacturing climbed to 56.1 in May from 55.4 in April, data released by the Institute for Supply Management on Wednesday showed. A PMI reading above 50 denotes expansion in activity.
The dollar also rose against major currencies as US Treasury yields jumped.
At 0945 IST, the dollar index, which measures the strength of the US currency against a basket of six major currencies, was at 102.53, compared with 102.50 on Wednesday. It was at 101.75 on Tuesday.
The South Korean won and the Taiwan dollar fell 0.5-0.6% against the dollar, the most among their Asian peers. (Richard Fargose)
India Rupee: Falls as dollar index strengthens, domestic shares slip
NEW DELHI – The rupee fell against the greenback today as the dollar index strengthened, tracking gains in US Treasury yields, dealers said.
US Treasury yields rose on expectations of aggressive rate hikes by the US Federal Reserve as robust economic activity was seen giving more room for policy tightening, dealers said.
A report by the Institute for Supply Management showed US manufacturing activity rebounded to a reading of 56.1 last month from 55.4 in April. A PMI reading above 50 denotes expansion in activity.
At 0937 IST, the dollar index was at 102.57 compared with 102.50 on Wednesday. It was at 101.75 on Tuesday.
Domestic and other Asian share indices fell, tracking losses on Wall Street, which further dampened sentiment for the Indian currency, dealers said. At 0937 IST, the Nifty 50 and the Sensex were down 0.2% and 0.1%, respectively.
” I think it is going to be yet another day of dull trade today. The 77.70 (a dollar) will be watched closely,” a dealer with a state-owned bank said. “However, looking at the trend from the past few days, the central bank might intervene near rupee’s move towards 77.70-70.75 (a dollar) levels.”
Dealers have now pegged immediate key technical support for the rupee at 77.70 a dollar.
For the rest of the day, the Indian unit is seen at 77.4000-77.8000 a dollar. (Pratiksha)
India Rupee: Expected range for rupee – Jun 2
NEW DELHI – Following are the expected support and resistance levels for the rupee, as forecasted by leading banks and brokerages in an Informist poll:
(Pratiksha and Richard Fargose)
End
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Namrata Rao
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