Informist, Thursday, May 11, 2023
By Kabir Sharma
MUMBAI – The rupee ended lower against the dollar today as banks persistently bought the greenback on behalf of oil marketing companies, dealers said.
“There is constant demand from oilers which is pushing the pair up (dollar/rupee),” a dealer with a foreign bank said.
The rupee was confined to a 17 paise range throughout the day and ended at 82.0900 a dollar as against Wednesday’s close of 81.9850.
Dealers said oil companies were taking advantage of relatively lower crude oil prices.
Crude oil prices fell over 1% on Wednesday after an unexpected increase in US oil inventories sparked demand concerns. The US Energy Information Administration said US crude oil inventories rose by about 3 mln barrels last week due to release from national reserves and a fall in exports.
However, some banks sold the greenback for overseas investments into the initial public offering of Nexus Select Trust, which supported the rupee, dealers said.
The real estate investment trust has floated an initial public offering to raise 32 bln rupees, which includes fresh issue of 14 bln rupees and an offer-for-sale of 18 bln rupees. On Wednesday, the second day, the offer was subscribed 60%, according to data from Axis Capital Ltd, one of the lead managers of the issue. The issue opened for subscription on Tuesday and will close today.
The rupee opened slightly higher against the dollar today as the greenback had weakened on Wednesday post the release of US inflation data for April.
The US April inflation reading came in at 4.9%, which was lower than the 5% prediction by analysts surveyed by Dow Jones. The annual increase in US consumer prices slowed to below 5% in April for the first time in two years.
The Indian unit then started moving lower as the greenback recovered during European trade ahead of Bank of England’s monetary policy outcome.
However, the risk sentiment for emerging currencies remains hurt due to fears of a US payment default. With only weeks left before the US may be forced into an unprecedented default, President Joe Biden and Speaker of the House Kevin McCarthy were still at odds over lifting the $31.4-trln debt ceiling.
“The dollar index rose to 101.90 as focus shifted from rate hikes/cuts to debt ceiling uncertainty,” said Anil Kumar Bhansali, Head of Treasury, Finrex Treasury Advisors LLP.
At 1652 IST, the dollar index was at 101.80 against 101.48 on Wednesday. It was at 101.61 on Tuesday.
According to the CME FedWatch tool, about 90.3% of Fed fund futures traders are expecting the Federal Reserve to keep the rates unchanged at its upcoming policy meeting in June, while the rest see a 25-basis-point hike.
FORWARDS
Premium on the one-year dollar/rupee forward contract ended up today tracking a fall in US Treasury yields, dealers said.
Premiums on forwards of a currency pair are reflective of the interest rate differential between the two countries.
The premium on the one-year dollar/rupee contract was 180.70 paise, against 179.16 paise on Wednesday. On an annualised basis, the premium was at 2.19%, unchanged against the previous close.
OUTLOOK
On Friday, the rupee will take cues from overnight movement in the dollar index and crude oil prices.
The Indian unit will track dollar index post the release of Bank of England’s monetary policy outcome. Bank of England hiked the benchmark bank rate by 25 basis points to 4.5% on 7-2 vote. The monetary policy committee said “labour market tight but signs of easing.”
Dealers see immediate key technical support for the rupee at 82.20 a dollar. During the day, the rupee is seen in the range of 81.80-82.20 a dollar.
India Rupee – World FX: Sterling down ahead of BoE policy outcome
India Rupee – World FX: Sterling down ahead of BoE policy outcome
MUMBAI – The pound sterling fell ahead of the Bank of England’s monetary policy outcome due today. The UK central bank is widely expected hike the interest rate by 25 basis points and market participants are keenly eyeing any signs that the central bank may continue with its rate hikes going ahead.
The dollar index strengthened tracking a fall in the pound sterling after it weakened on Wednesday following the release of the US CPI data.
US inflation for April came in at 4.9%, which was lower than the 5% predicted by economists surveyed by Dow Jones. The rate rose 0.4% on month, in line with expectations. However, the inflation rate is still far higher than the US Federal Reserve’s target of 2%. Further, the annual increase in US consumer prices slowed to below 5% in April for the first time in two years.
Market participants will await US jobless claims and producer price data due today for further signs of whether inflation has cooled down in the world’s largest economy.
At 1456 IST, the dollar index was at 101.89 against 101.48 on Wednesday. It was at 101.61 on Tuesday.
Both the euro and the Australian dollar fell 0.5% against the greenback. (Aiswarya Santhosh)
India Rupee: Down on dollar buys by oil cos, recovery in greenback
India Rupee: Down on dollar buys by oil cos, recovery in greenback
MUMBAI – The rupee was lower against the dollar as state-owned banks bought the greenback on behalf of oil marketing companies, dealers said.
“Oilers are there as always, they are buying as crude prices seem attractive at these levels,” a dealer with a foreign bank said.
Crude oil prices fell over 1% on Wednesday after an unexpected increase in US oil inventories sparked demand concerns. The US Energy Information Administration said US crude oil inventories rose by about 3 mln barrels last week due to release from national reserves and a fall in exports.
Further, weighing on the rupee, the dollar recovered during European trade as the sterling fell ahead of the release of Bank of England’s monetary policy outcome, due later today, dealers said. A majority of economists expect a 7-2 split vote to take the Bank Rate from 4.25% to 4.5%, according to CNBC.
At 1425 IST, the dollar index was at 101.90 against 101.48 on Wednesday. It was at 101.61 on Tuesday.
However, some banks sold the greenback for foreign fund inflows into Indian corporates which limited losses for the rupee, dealers said.
Dealers have pegged the next technical support for the rupee at 82.20 a dollar. During the day, the rupee is seen at 81.80-82.30 a dollar. (Kabir Sharma)
India Rupee – Asia FX: Most units up as dlr down after softer US CPI
MUMBAI – Most Asian currencies were up against the dollar as the US unit weakened after inflation print came softer than expected.
The US April inflation reading came in at 4.9%, lower than the 5% forecast by analysts surveyed by Dow Jones. In accordance with the expectations, the monthly inflation rate rose by 0.4%.
At 0932 IST, the dollar index was at 101.45 against 101.48 on Wednesday. It was at 101.61 on Tuesday.
The South Korean won was up 0.2% against the dollar. The Indonesian rupiah and the Malaysian ringgit were up 0.2% and 0.1%, respectively.
However, the risk sentiment for emerging currencies remains weak due to fear of a US payment default. With only weeks left before the US may be forced into an unprecedented default, President Joe Biden and Speaker of the House Kevin McCarthy were still at odds over lifting the $31.4-trln debt ceiling.
The Thai baht was down 0.1% against the dollar.
Market participants now await the Bank of England’s policy review outcome, due later today. (Kabir Sharma)
India Rupee: Expected range for rupee – May 11
MUMBAI – Following are the expected support and resistance levels for the rupee today, as forecasted by leading banks and brokerages in an Informist poll:
(Kabir Sharma)
End
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Maheswaran Parameswaran
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