Informist, Wednesday, Dec 14, 2022
By Aiswarya Santhosh
MUMBAI – The rupee ended sharply higher against the dollar today due to broad-based weakness in the US unit and persistent sales of the greenback on behalf of exporters, dealers said.
The rupee settled 0.4% higher at 82.4600 a dollar, as against 82.8050 a dollar on Tuesday. Most Asian currencies rose in a range of 0.1-0.8% against the dollar, with the Malaysian ringgit gaining the most at 0.8%.
The Indian unit opened 20 paise higher at 82.6050 a dollar as the dollar plunged globally after data showed US consumer prices rose less than expected in November, dealers said. The US CPI print for November was at 7.1%, as against market expectations of 7.3%. In October, it was at 7.7%. The latest figure marked the lowest annual inflation increase in the US in nearly a year.
The lower than expected inflation print raised expectations among market participants that the US Federal Reserve would slow down its pace of rate hikes going ahead.
The Federal Open Market Committee will announce its interest rate decision at 0030 IST on Thursday, after the conclusion of its two-day meeting. The Fed, which has raised its policy rates by 375 basis points this year, including four straight hikes of 75 bps each, is expected to hike rates by 50 bps.
The market also awaits a press conference by Fed chair Jerome Powell after the meeting for further cues on the Fed’s direction.
At 1636 IST, the dollar index, which measures the strength in the greenback against a basket of six major currencies, was at 103.72 compared with 103.98 on Tuesday. It was 105.13 on Monday.
Today, foreign banks stepped in to sell dollars heavily on behalf of exporters around the 82.60-82.70 a dollar level, which supported the rupee, dealers said. Gradually, the rupee touched the day’s high of 82.4000 a dollar, as exporters sold the greenback on expectations of further appreciation in the Indian currency in the coming days, dealers said.
“There was persistent selling (of dollars) by exporters in the market. After the rupee broke the 82.50 level the market is seeing resistance at the 82.35 level,” said a dealer with a state-owned bank.
Sales of the greenback by banks were also likely to have been for foreign portfolio inflows, which also supported the Indian unit, dealers said.
The rupee was also aided by a rise in domestic equity indices. The Nifty 50 and the Sensex ended over 0.3% and 0.2% higher, respectively.
However, state-owned banks bought dollars for oil marketing companies and importers around 82.45 a dollar, which limited gains for the Indian unit, dealers said.
The relatively lower dollar/rupee levels are attractive for importers, dealers said.
Oil prices rose over 2% on Tuesday as risk sentiment improved after the US inflation data and a weaker dollar boosted the demand outlook for oil. The market was also buoyed by concerns about supply disruptions, including the ongoing shutdown of the Canada-to-US Keystone crude pipeline following a massive leak last week.
At 1635 IST, the February contract of Brent crude oil on the Intercontinental Exchange was at $81.34 a bbl against $80.68 on Tuesday. It settled $77.99 a bbl on Monday.
FORWARDS
Premiums on dollar/rupee forwards rose sharply as banks and importers bought dollars for forward delivery, noting a sharp fall in US Treasury yields after lower-than-expected US November CPI data, dealers said.
The premium on the one-year, exact-period dollar/rupee forward contract was at 162.05 paise against 156.25 paise at Tuesday’s close. On an annualised basis, the premium was at 1.95% against 1.89% on Tuesday.
Premiums on forwards of a currency pair are reflective of the interest rate differential between the two countries. The spread between interest rates in the US and India will widen should the US Federal Reserve slow its pace of rate hikes.
OUTLOOK
On Thursday, the rupee will take cues from overnight movement in the dollar index after the outcome of the Federal Open Market Committee’s two-day meeting later today.
“The near-term outlook for rupee seems positive but not sustainable,” a dealer with a big state-owned bank said. “There’s a lot of buying interest from importers in the market and exporters are barely there. Any sustainable appreciation in the rupee is dependent on the quantity of inflows.”
Traders are also eyeing the European Central Bank, and Bank of England’s policy meetings due this week.
Dealers see immediate technical support for the Indian currency at 82.80 a dollar and resistance at 82.20 a dollar.
During the day, the rupee is seen at 82.30-82.80 a dollar.
India Rupee – World FX: Dollar weakens after US CPI data; sterling up
India Rupee – World FX: Dollar weakens after US CPI data; sterling up
NEW DELHI – The dollar weakened against other major currencies after US consumer inflation rose less than expected in November.
The US Consumer Price Index rose to 7.1% in November as against market expectations of 7.3%. In October, it was at 7.7%. The latest figure marked the smallest annual inflation increase in the US in nearly a year.
At 1524 IST, the dollar index, which measures strength in the greenback against a basket of six major currencies, was at 103.74 compared with 103.98 on Tuesday. It was 105.13 on Monday.
The Japanese yen was up 0.2% against the dollar after a survey by Bank of Japan showed business sentiment among Japan’s non-manufacturers rose to 19 in October, against market estimate of 17. It was at 14 in September.
The pound sterling was 0.3% higher against the US dollar ahead of the Bank of England’s policy meeting on Thursday, where the central bank is widely expected to raise interest rate by 50 basis points. Consumer price inflation in the UK fell to 10.7% in November, against a Reuters’ poll projection of 10.9%.
The euro was up 0.3% against the dollar as the market awaits the outcome of the European Central Bank’s policy meeting, to be detailed at 1845 IST on Thursday. (Ananya Chaudhuri)
India Rupee: Rises more on dlr sales for exporters, likely FX inflows
NEW DELHI – The rupee rose further against the dollar as foreign banks persistently sold the greenback on behalf of exporters, dealers said.
“Some foreign banks are selling (dollars) around 82.60-82.70 (a dollar),” a dealer with a private bank said.
Dealers said exporters sold the US unit on expectation of further appreciation in the Indian currency in the coming days.
Banks also sold the greenback, likely for foreign portfolio inflows, which also supported the Indian unit, dealers said.
Meanwhile, some banks bought the US unit on behalf of oil marketing companies and importers at around 82.50 a dollar, which restricted gains for the Indian currency, dealers said.
Traders remain cautious ahead of the Federal Open Market Committee’s meeting outcome at 0030 IST on Thursday. The US central bank is expected to slow down the pace of its rate hike cycle, dealers said.
Dealers have pegged long-term resistance for the rupee at 82.20 a dollar.
The rupee is seen at 82.40–82.90 for the rest of the day, dealers said. (Ananya Chaudhuri)
India Rupee:Sharply up as dlr slips globally post softer US CPI data
MUMBAI – The rupee rose sharply against the greenback today as the dollar slipped globally after the US inflation rose less-than-expected in November, leading to expectation that the Federal Reserve may slow down its pace of rate hikes going ahead, dealers said.
The annual US inflation rose 7.1%, lower than market expectation of 7.3% and 7.7% in October. This was the smallest annual inflation increase in nearly a year.
At 1000 IST, the dollar index, which measures the strength in the greenback against a basket of six major currencies, was at 104.08 compared with 103.98 on Tuesday. It was 105.13 on Monday.
Rise in the domestic share indices also aided the rupee. At 1000 IST, both the Nifty 50 and the Sensex rose 0.3%.
“Exporters may sell (dollars) above the 82.75 levels, so the rupee may not move beyond that,” a dealer with a state-owned bank said. “There could be likely foreign fund inflows in the market today.”
Market participants are now awaiting the Federal Open Market Committee’s meeting outcome at 0030 IST on Thursday, where the Fed’s rate-setting panel is seen hiking the policy rates by 50 basis points at the end of its two-day meet.
Dealers have pegged long term resistance for the rupee at 82.20 a dollar.
The rupee is seen in the range of 82.40–82.90 for the rest of the day, dealers said. (Aiswarya Santhosh)
India Rupee: Expected range for rupee – Dec 13
MUMBAI – Following are the expected support and resistance levels for the rupee today, as forecasted by leading banks and brokerages in an Informist poll:
(Aiswarya Santosh)
End
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Avishek Dutta
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