Informist, Monday, Jun 5, 2023
By Aiswarya Santhosh
MUMBAI – The rupee ended sharply lower against the dollar today due to a surge in crude oil prices and dollar index, dealers said.
After moving in a range of 24 paise throughout the day, the rupee settled 0.4% lower at 82.6700 against the greenback, compared with 82.3050 a dollar on Friday.
The rupee opened sharply lower at 82.4600 a dollar on a rise in crude oil prices and the dollar index, dealers said. Crude oil prices surged after Saudi Arabia’s energy minister said on Sunday the production will fall to 9 mln barrels per day in July from around 10 mln bpd in May, marking the country’s biggest reduction in years.
This came after the Organization of the Petroleum Exporting Countries and its allies agreed to roll over existing crude oil production cuts announced in April till the end of this year, while announcing further cuts through the whole of 2024.
At 1451 IST, the August contract of Brent crude oil on the Intercontinental Exchange was at $77.54 a bbl as against $76.13 a bbl on Friday. It was $74.28 a bbl on Thursday. Today, prices of the commodity jumped over 1%, weighing on the Indian unit.
Moreover, the dollar index rose sharply after strong US economic data showed that the world’s largest economy remains resilient, dealers said. Data showed that nonfarm payrolls rose in May by 339,000, higher than the expected figure of 190,000. In April, it rose by 253,000. However, data also showed that unemployment rate rose to 3.7% in May from 3.4% in April.
According to CME FedWatch tool, market participants have priced in a 79.3% chance that the Fed will pause its interest rate at its policy meeting next week, while there is a 20.7% expectation that the Fed will hike the interest rate by 25 basis points.
During the day, the dollar index strengthened further, weighing on the Indian unit, dealers said. At 1511 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 104.26 as against 104.04 on Friday. It was at 103.55 on Thursday.
The Indian unit kept falling against the dollar through the day as banks persistently bought the greenback for importers, dealers said. They said that importers bought dollars heavily at the 82.50-82.55 a dollar, fearing further depreciation in the Indian currency.
Gradually, the rupee fell to the day’s low of 82.6850 a dollar during the last leg of trade, as dollar index and crude oil prices climbed sharply, dealers said. Banks also bought dollars to cover their existing short dollar bets noting strength in the dollar index, dealers said.
“It (USDINR) was on the upside today after strong US data,” said a dealer with a state-owned bank. “Rise in crude oil prices also hurt sentiment (rupee), going ahead US data is crucial for its (rupee) movement.”
However, a rise in the domestic share indices limited losses for the Indian unit, dealers said. The Nifty 50 and the Sensex closed higher by 0.3% and 0.4%, respectively.
Dealers also noted a lack of significant selling of dollars by exporters in the currency market as they were waiting for 82.7000 levels to sell the greenback.
FORWARDS
Premiums on one-year dollar/rupee forward contracts ended at a six-month low, tracking a jump in US Treasury yields, dealers said.
US Treasury yields rose after data showed that nonfarm payrolls rose more than anticipated in May, which may exert pressure on the Fed to raise interest rates at its policy meeting on Jun 13-14.
Premiums on forwards of a currency pair are reflective of the interest rate differential between the two countries. A rise in US’ interest rates would ensure that the spread with India rates narrows going ahead.
Nonfarm payrolls in the US rose by 339,000 jobs last month. Economists polled by Reuters had forecast an increase of 190,000 jobs. The economy created 93,000 more jobs in March and April than previously estimated, the survey showed on Friday.
Market participants see strong technical support at 1.60% for the one-year dollar/rupee forward contract.
Traders now await the Reserve Bank of India Monetary Policy Committee’s policy review decision on Thursday, dealers said. According to an Informist poll, an overwhelming majority of 29 out of 30 respondents expect the domestic rate-setting panel to keep the repo rate unchanged at 6.50% at the end of its three-day meeting.
“There’s no joy to receive around these levels and importers are also staying on the sidelines for better levels,” a dealer with a private bank said. “Market is eyeing paying from RBI around these levels.”
The premium on the one-year contract was at 142.38 paise as against 146.40 paise on Friday. On an annualised basis, the premium was at 1.72% as against 1.77% at the previous close.
OUTLOOK
On Tuesday, the rupee will take cues from movement in the dollar index and crude oil prices, dealers said.
“Rupee to remain in the range of 82.50 to 83.00 with uncovered imports to have a stop loss at 82.98 (a dollar level) if RBI allows further weakening. The monetary policy is starting tomorrow and will end on 8th with announcement of change in interest rate. Expectations is of a pause,” said Anil Kumar Bhansali, head of treasury, Finrex Treasury Advisors LLP.
The Monetary Policy Committee meeting starts on Tuesday and will end on Thursday, where they are widely expected to pause the interest rate.
Dealers have pegged the immediate key technical support for the rupee at 82.7000 a dollar. During the day, the rupee is seen at 82.30-82.80 a dollar.
India Rupee: Premiums slump to 6-mo low on jump in US Treasury ylds
MUMBAI – Premiums on one-year dollar/rupee forward contracts plunged to a near six-month low, tracking a jump in US Treasury yields, dealers said.
US Treasury yields rose after data showed that non-farm payrolls rose more than anticipated in May, which may exert pressure on the US Federal Reserve to raise interest rates at its policy meeting on Jun 13-14.
Premiums on forwards of a currency pair are reflective of the interest rate differential between the two countries. A rise in US’ interest rates would ensure that the spread with India rates narrows going ahead.
Non-farm payrolls in the US rose by 339,000 jobs last month. Economists polled by Reuters had forecast an increase of 190,000 jobs. The economy created 93,000 more jobs in March and April than previously estimated, the survey showed on Friday.
Market participants see strong technical support at 1.60% for the one-year dollar/rupee forward contract.
“The fall in premiums is mostly because of (rise in) US Treasury yields,” said a dealer with a big state-owned bank. “The 1.60% (premium) seems like a support for now, if it breaches importers should step in.”
Traders now await the Reserve Bank of India’s Monetary Policy Committee’s policy review decision on Thursday, dealers said. According to an Informist poll, an overwhelming majority of 29 out of 30 respondents expect the domestic rate-setting panel to keep the repo rate unchanged at 6.50% at the end of its three-day meeting.
At 1423 IST, premium on the one-year contract was at 141.77 paise as against 146.40 paise on Friday. On an annualised basis, the premium was at 1.71% as against 1.77% at the previous close. (Pratiksha)
India Rupee: Remains sharply down as banks buy dollars for importers
MUMBAI – The rupee remained sharply down against the dollar as banks bought the greenback for importers, dealers said. They said importers bought the greenback fearing a further depreciation of the Indian currency.
“Importers were panic covering at the 82.50-82.55 levels as they feared dollar will rise further,” said a dealer with a big state-owned bank. “This is due to reaction of the strong US non-farm payrolls data after which dollar rose.”
The dollar index strengthened after data showed that non-farm payrolls rose in May by 339,000, higher than the expected figure of 190,000. In April, it rose by 253,000. However, data also showed that unemployment rate rose to 3.7% in May from 3.4% in April.
According to CME FedWatch tool, market participants have priced in a 78.1% chance that the Fed will pause its interest rate at its next policy meeting in June, while there is a 21.9% expectation that the Fed will hike the interest rate by 25 basis points.
At 1329 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 104.26 as against 104.04 on Friday. It was at 103.55 on Thursday.
However, a rise in the domestic share indices limited losses for the Indian unit, dealers said. At 1330 IST, both the Nifty 50 and the Sensex rose 0.4% and 0.5%, respectively.
Dealers have pegged next technical support for the rupee at 82.60 a dollar. During the day, it is seen at 82.20-82.60 a dollar. (Aiswarya Santhosh)
India Rupee: Sharply dn as dollar index rises after strong econ data
MUMBAI – The rupee fell sharply against the dollar as the dollar index rose after strong US jobs data and as US President Joe Biden signed the debt ceiling deal, thereby avoiding a default for the world’s largest economy, dealers said.
US nonfarm payrolls rose in May by 339,000, higher than the expected figure of 190,000. In April, it rose by 253,000. However, data also showed that unemployment rate rose to 3.7% in May from 3.4% in April.
At 0925 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 104.17 as against 104.04 on Friday. It was at 103.55 on Thursday.
“The rupee will decline today after the strong US jobs data,” said a dealer with a state-owned bank. “Today, the range will be 82.40-82.65.”
However, a rise in the domestic share indices limited losses for the Indian unit, dealers said. At 0928 IST, the Nifty 50 and the Sensex rose 0.4% and 0.5% respectively.
Dealers have pegged next technical support for the rupee at 82.60 a dollar. During the day, it is seen at 82.20-82.60 a dollar. (Aiswarya Santhosh)
India Rupee – Asia FX: Most down as dlr rises on robust US jobs data
MUMBAI – Most Asian currencies were down against the dollar as the greenback surged on the back of a sharp increase in US nonfarm payrolls in May.
US nonfarm payrolls rose by 339,000 in May, sharply higher than the expected figure of 190,000 in a Reuters poll. In April, it rose by 253,000. However, data also showed that unemployment rate rose to 3.7% in May from 3.4% in April.
At 0914 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 104.13 as against 104.04 on Friday. It was at 103.55 on Thursday.
The Philippines peso lead the losses and was down 0.3% against the dollar. The South Korean won and the Taiwan dollar were down 0.2% and 0.1% against the dollar, respectively.
Bucking the trend, the Indonesian rupiah was up 0.7%, against the dollar ahead of inflation data, due to be released later today. (Kabir Sharma)
India Rupee: Expected range for rupee – Jun 5
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
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Aditya Sakorkar
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