Informist, Friday, Jul 21, 2023
By Ananya Chaudhuri and Kabir Sharma
NEW DELHI/MUMBAI – The rupee ended steady against the dollar today as state-owned banks persistently sold dollars, likely on behalf of the Reserve Bank of India, which offset the impact of a sharp rise in the dollar index in European trade, dealers said.
“It (rupee) went up to 81.98 (a dollar) yesterday but with dollar strength overnight it (rupee) fell down to 82.00 (a dollar) level,” said a dealer at a private bank. “It’s now depends whether they (RBI) want to protect levels or not. They’re just there blocking everything that comes in the way.”
After trading in a tight range of 11 paise throughout the day, the rupee settled at 81.9450 a dollar against 81.9850 a dollar on Thursday.
The Indian currency opened marginally lower against the greenback as the dollar index rose after data showed continued resilience in the US labour market, which stoked fears that the US Federal Reserve may keep interest rates higher for a prolonged period.
Initial claims for state unemployment benefits in the US dropped by 9,000 to a seasonally adjusted 228,000 for the week ended Saturday, the lowest level since mid-May. Economists polled by Reuters had forecast 242,000 jobless claims being filed for the week.
According to CME FedWatch tool, about 99.6% expect a 25-basis-point rate hike in US Fed’s Jul 25-26 meeting and 0.4% expect the US central bank to raise the federal funds rate by 50 bps. Before the initial jobless claims data, a few people were expecting a pause.
A sharp fall in Indian equity indices also weighed on the rupee, dealers said. The benchmark Nifty 50 and Sensex ended 1.2% and 1.3% lower, respectively.
Some banks also bought dollars on behalf of importers who wanted to take advantage of relatively lower dollar/rupee level which weighed on the local unit, dealers said.
However, the rupee touched the day’s high of 81.9375 a dollar as the RBI stepped in to sell dollars to protect the rupee from runaway depreciation, dealers said.
Dealers also said that some banks sold dollars on account of foreign fund inflows.
For most part of the day, the rupee traded in a narrow range as many participants remained on the sidelines due to lack of significant data points before the US Fed’s policy review meeting next week, dealers said.
Once the Fed policy outcome is out on Wednesday, investors will try and read into Fed Chairman Jerome Powell’s remarks for hints on the Fed’s rate move in September.
In European trade, the dollar index rose above the 101.00 level tracking a sharp fall in the yen after moderation in Japan’s core inflation in June affirmed that Bank of Japan will likely maintain its ultra-loose monetary policy.
At 1604 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 101.04 against 100.79 on Thursday. It was at 100.29 on Wednesday.
FORWARDS
Premiums on dollar/rupee one-year forward contracts ended lower tracking a rise in US Treasury yields, dealers said.
The premium on the one-year dollar/rupee contract was 137.31 paise, against 139.61 paise on Thursday. On an annualised basis, the premium was at 1.67%, against the previous close of 1.70%.
US Treasury yields rose because of a resilient US labour market, which raised concerns that the Fed may keep interest rates higher for a prolonged period.
Premiums on forwards of a currency pair are reflective of the interest rate differential between the two countries.
OUTLOOK
On Monday, the rupee will take cues from movement in the dollar index and crude oil prices, dealers said.
“The rupee is expected to continue in the range of 81.90 to 82.30 as (dollar) inflows continue and oil companies take a back seat in buying dollars, while RBI absorbs the inflows,” said Anil Kumar Bhansali, head of treasury and executive director, Finrex Treasury Advisors LLP.
During the day, the rupee is seen in a range of 81.80-82.30 a dollar. Dealers peg immediate key technical support for the rupee at 82.30 a dollar.
India Rupee – World FX: Yen slumps post Japan’s CPI data; dlr surges
NEW DELHI – The Japanese yen slumped 1.2% against the US dollar after data showed Japan’s core CPI inflation moderated in June which affirmed that the Bank of Japan will likely maintain its ultra-loose monetary policy.
Data showed Japan’s core inflation, excluding fresh foods and fuel cost, fell to 4.2% on year in June from 4.3% in May. Core CPI is a closely watched metric by Japan’s central bank for policy decisions. The Bank of Japan’s policy meeting is scheduled to take place on Jul 28.
Headline inflation in Japan rose 3.3% on year in June, in line with market expectation. Taking June into account, the country’s headline inflation remained above the Bank of Japan’s target rate of 2% for straight 15 months.
Meanwhile, the dollar index surged tracking a sharp decline in the Japanese yen, and as weaker US jobless claims data stoked fears that the US Federal Reserve May remain hawkish for prolonged period.
Initial claims for state unemployment benefits dropped by 9,000 to a seasonally adjusted 228,000 for the week ended Saturday, the lowest level since mid-May. Economists polled by Reuters had forecast 242,000 jobless claims filed for the latest week.
According to CME FedWatch tool, about 99.6% expect a 25-basis-point rate hike in US Fed’s Jul 25-26 meeting, while 0.4% expect the US central bank to raise the federal funds rate by 50 bps. Before the initial jobless claims data, a few people were expecting a pause.
At 1451 IST, the dollar index, which measures the strength in the greenback against a basket of six major currencies, was at 101.01 as against 100.79 on Thursday. It was at 100.29 on Wednesday. (Ananya Chaudhuri)
India Rupee: In thin band; PSU banks buy dollars for importers
NEW DELHI – The rupee moved in a narrow range of 11 paise against the dollar as state-owned banks rushed to buy the greenback for importers, which offset the impact of banks’ dollar sales likely for foreign fund inflows, dealers said.
“Right after (dollar) sales were gone from the market, (dollar) buying started. Banks seemed to be on both sides,” said a dealer at a state-owned bank. “The range of 81.90-82.10 (a dollar) is likely to hold today.”
A rise in the dollar index also weighed on the local unit, dealers said. The dollar index rose after fewer-than-expected jobless claims in the US led to fear that the US Federal Reserve may remain hawkish for a prolonged period.
At 1332 IST, the dollar index, which measures the strength in the greenback against a basket of six major currencies, was at 100.97 as against 100.79 on Thursday. It was at 100.29 on Wednesday.
A slump in domestic equity indices weighed on the Indian currency, dealers said. At 1333 IST, the Nifty 50 and the Sensex were down 0.8% and 0.9%, respectively.
Dealers peg 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. (Ananya Chaudhuri)
India Rupee: Tad down as dlr index rises post robust US jobless data
MUMBAI – The rupee was slightly lower against the dollar as the greenback strengthened post the release of US unemployment claims which showed continued resilience in the labour market, dealers said.
Initial claims for state unemployment benefits dropped by 9,000 to a seasonally adjusted 228,000 for the week ended Saturday, the lowest level since mid-May. Economists polled by Reuters had forecast 242,000 jobless claims filed for the latest week.
According to CME FedWatch tool, about 99.6% expect a 25-basis-point rate hike in US Fed’s Jul 25-26 meeting while 0.4% expect the US central bank to raise the federal fund rate by 50 bps. Before the initial jobless claims data, a few people were expecting a pause.
Market participants await the interest rate decision by the Federal Reserve on Wednesday, for any new hints on whether the Fed will resume raising rates in September. Volumes in the currency market may also remain subdued on caution ahead of the Federal Open Market Committee’s meeting.
“As the markets await the FOMC outcome in the upcoming meeting, the momentum in the currencies would be range bound in the absence of higher speculative trades,” said Amit Pabari, managing director, CR Forex Advisors.
Dealers peg 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. (Kabir Sharma)
India Rupee: Expected range for rupee – Jul 21
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)
India Rupee – Asia FX: Most dn as dollar surges post US jobless data
NEW DELHI – Most Asian currencies fell against the dollar today as the dollar index surged on Thursday. The dollar index rose after lesser-than-expected jobless claims in the US ignited fears of prolonged hawkishness by the US Federal Reserve.
On Thursday, data from the US Labor Department showed that the number of people filing for initial claims for jobless benefits declined 9,000 to a seasonally adjusted 228,000 for the week ended Jul 15. The figure was below the 242,000 claims forecasted by economists in a Reuters poll.
According to the CME FedWatch tool, about 99.6% Fed fund futures traders expect a 25-basis-point hike at the Fed’s Jul 25-26 meeting, while 0.4% expect it to raise the federal fund rate by 50 bps. Before the initial jobless claims data, a few people were expecting a pause.
At 0803 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 100.77 as against 100.79 on Thursday. It was at 100.29 on Wednesday.
Most Asian currencies fell in the range of 0.1-0.9% against the greenback, with the South Korean won being the worst-performing currency.
Bucking the trend, the Chinese yuan was 0.1% higher against the US unit as China’s new norms for cross-border transactions, announced on Thursday, continued to support the local currency.(Ananya Chaudhuri)
End
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Ashish Shirke
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