Informist, Friday, May 12, 2023
By Aiswarya Santhosh
MUMBAI – The rupee ended at over a three-week low against the dollar today as banks persistently bought the greenback for oil marketing companies and importers, dealers said. However, banks’ dollar sales for exporters limited the losses for the Indian currency, they added.
After moving in a narrow range of 14 paise through the day, the rupee settled at 82.1625 a dollar as against 82.0900 a dollar on Thursday.
The rupee opened largely steady at 82.10 a dollar today as a rise in the dollar index on Thursday was offset by a fall in crude oil prices, dealers said.
The dollar index strengthened due to safe-haven demand for the greenback as traders fear a possible recession in the world’s largest economy, owing to a political standoff over the debt ceiling in the US. On Thursday, US Treasury Secretary Janet Yellen asked Congress to increase the $31.4 trln debt limit to avoid an unprecedented default, which may trigger a global economic downturn.
Meanwhile, data on Thursday showed the number of Americans filing new claims for unemployment benefits rose to an over one-year high last week, raising the odds that the Federal Reserve will halt its rate hikes next month.
Data also showed that producer prices in the US rose moderately in April, the smallest annual increase in over two years.
At 1506 IST, the dollar index was at 102.11 against 102.06 on Thursday. It was at 101.47 on Wednesday. More
Meanwhile, a fall in the crude oil prices aided the Indian unit. Crude oil prices fell due to fears of a recession in the world’s largest economy following the US debt ceiling issue. Rising jobless claims in the US also weighed on oil prices.
At 1509 IST, the June contract of Brent crude oil on the Intercontinental Exchange was at $74.44 a bbl as against $74.98 a bbl on Thursday. It was at $76.41 a bbl on Wednesday.
During the day, the rupee gradually touched the day’s low of 82.23 a dollar as banks persistently bought the greenback for oil marketing companies and importers, dealers said. Importers bought the greenback at the 82.10 a dollar level fearing further depreciation of the Indian currency, dealers said.
“Oilers and importers were covering (dollars) today fearing a rise in the USDINR, after rupee breached 81.90 level in the last few days, they started hedging,” said a dealer with a state-owned bank.
However, dealers said that banks stepped in to sell dollars for exporters at the 82.17-82.20 a dollar level, which restricted losses for the Indian unit. During the last half-hour of trade, the rupee erased some of its losses and touched the 82.15 levels due to dollar sales by exporters, they said.
Moreover, a slight rise in the domestic share indices also supported the Indian unit. Both the Nifty 50 and the Sensex closed 0.1% and 0.2% higher respectively.
FORWARDS
Premium on the one-year dollar/rupee forward contract ended lower today tracking a rise in US Treasury yields, dealers said.
Premiums on forwards of a currency pair are reflective of the interest rate differential between the two countries.
Premium on the dollar/rupee forwards also fell because some exporters sold the greenback for forward delivery to take advantage of the fall in the rupee against the dollar in the spot market, dealers said.
Market participants keenly await the India CPI print for April, scheduled to be released at 1730 IST today, as it may provide clues on future interest rate action by the Reserve Bank of India’s Monetary Policy Committee.
India’s retail inflation rate, based on CPI, likely fell to an 18-month low of 4.8% in April from 5.66% in March, primarily on account of the statistical effect of a high base, according to an Informist poll of 20 economists.
The premium on the one-year dollar/rupee contract was 176.00 paise, against 180.70 paise on Thursday. On an annualised basis, the premium was at 2.14%, against the previous close of 2.20%.
OUTLOOK
On Monday, the rupee will take cues from overnight movement in the dollar index and crude oil prices.
Market participants await India’s CPI data for April due today for cues on the Reserve Bank of India’s monetary policy decisions going forward.
“Now market is looking at the CPI data, based on that we can see rupee’s movement,” said a dealer with a foreign bank. “I see a range of 81.90-82.20.”
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 81.80-82.30 a dollar.
India Rupee – World FX: Dollar up on US debt ceiling uncertainty
MUMBAI – The dollar was up against most major currencies as sentiment for risky assets was hurt due to the uncertainty about an unprecedented US default. US Treasury Secretary Janet Yellen urged the Congress to increase the $31.4-trln federal debt ceiling on Thursday.
Yellen said that the debt ceiling needs to be raised to prevent an unprecedented default that would send the world economy into a tailspin and jeopardise American economic dominance.
US President Joe Biden also said on Wednesday that if the Congress does not immediately do so, the US treasury may run out of money to pay the government’s bills as soon as Jun 1.
At 1541 IST, the dollar index was at 102.08 against 102.06 on Thursday. It was at 101.47 on Wednesday.
The Japanese yen and the euro were down 0.2% and 0.1% against the dollar, respectively.
Bucking the trend, the pound sterling was up 0.1% against the dollar after the Bank of England hiked rates by 25 basis points to 4.5% on Thursday, taking borrowing costs to their highest level since 2008. (Kabir Sharma)
India Rupee: Down as importers buy dlr; exporters’ dlr sales support
MUMBAI – The rupee fell against the dollar today as banks bought the greenback for oil marketing companies and importers, dealers said.
“Importers were there in the market as they fear USDINR may rise going ahead,” said a dealer with a private bank. “However, exporters were selling (dollars) at the 82.17-20 level, so it remained in a range.”
Dealers also said that banks sold dollars for exporters limiting the losses for the Indian unit.
The dollar index rose on safe-haven demand as traders fear a potential recession in the US due to a political standoff over the US debt ceiling issue. However, the index’s rise was limited as data showed that the number of Americans newly claiming unemployment benefits rose to an over one-year high last week, raising the odds that the Federal Reserve will halt its rate hikes next month.
At 1334 IST, the dollar index was at 102.08 against 102.06 on Thursday. It was at 101.47 on Wednesday.
Dealers have pegged the next technical support for the rupee at 82.30 a dollar. During the day, the rupee is seen at 81.80-82.30 a dollar. (Aiswarya Santhosh)
India Rupee – Asia FX: Most units dn as dlr rises on recession fears
MUMBAI – Most Asian currencies were down against the dollar today as the greenback strengthened on Thursday due to safe-haven demand as traders fear a recession in the world’s largest economy amid a political standoff over the US debt ceiling.
US Treasury Secretary Janet Yellen on Thursday asked the Congress to increase the $31.4-trln debt limit to avoid an unprecedented default, which may set off a global economic downturn.
Meanwhile, data on Thursday showed the number of Americans filing new claims for unemployment benefits rose to an over one-year high last week, raising the odds that the Federal Reserve will halt its rate hikes next month.
Data also showed that producer prices in the US rose moderately in April, marking the smallest annual increase in over two years.
At 1122 IST, the dollar index was at 101.98 against 102.06 on Thursday. It was at 101.47 on Wednesday.
The Philippines peso was flat against the greenback after data showed better-than-expected GDP growth in the country in the March quarter.
The Indonesian rupiah fell 0.2% against the greenback, and the South Korean was down 0.7% against the dollar. (Aiswarya Santhosh)
India Rupee: Steady; rise in dlr index offsets fall in crude prices
MUMBAI – The rupee was steady today as the impact of a fall in crude oil prices was offset by strength in the dollar index, dealers said.
On Thursday, oil prices dropped around 2% to a one-week low as a political impasse over the debt ceiling in the US fuelled fears of a recession in the world’s largest oil consumer. Growing US jobless claims and disappointing economic data from China also weighed on prices of the commodity.
At 1008 IST, the June contract of Brent crude oil on the Intercontinental Exchange was at $74.50 a bbl as against $74.98 a bbl on Thursday. It was at $76.41 a bbl on Wednesday.
The US Labor Department said on Thursday that the producer price index for final demand increased 0.2% in April. Data for March was also slightly corrected, showing that the PPI declined 0.4% against the previously reported 0.5%. On a yearly basis, the PPI increased 2.3%, the smallest on-year rise since January 2021. The easing of PPI gave way to fears of a recession.
The dollar index rose over 102 for the first time in over 10 days as fears of a US default increased, hurting the sentiment for risky assets. On Thursday, US Treasury Secretary Janet Yellen urged the Congress to increase the $31.4-trln federal debt ceiling to prevent an unprecedented default that would send the world economy into a tailspin and jeopardise American economic dominance.
US President Joe Biden also said on Wednesday that if the Congress does not immediately do so, the US treasury may run out of money to pay the government’s bills as soon as Jun 1.
At 1016 IST, the dollar index was at 102.02 against 102.06 on Thursday. It was at 101.47 on Wednesday.
Some dealers said the rupee might remain in a narrow range and volumes may be low.
“It is going to be in the 82-82.15 range today. Dollar is strong, but liquidity seems thin,” a dealer with a state-owned bank 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: Expected range for rupee – May 12
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 Santhosh)
End
US$1 = 82.16 rupees
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Akul Nishant Akhoury
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