Informist, Monday, Sep 18, 2023
By Kabir Sharma
MUMBAI – The rupee ended at a record closing low against the dollar today as banks persistently bought the greenback on behalf of oil marketing companies, dealers said. The rupee was also weighed down by broad-based strength in the dollar, they said.
“There is heavy oil buying as crude is also rising,” said a dealer at a big state-owned bank. “The dollar is strong globally, which also played a role (in the fall of the rupee).”
The rupee closed at 83.2675 a dollar today against Friday’s close of 83.1850 a dollar, barely two paise shy of the record low of 83.2850 touched on Oct 20.
The rupee opened higher against the dollar today as the dollar index fell in early trade after data showed consumer confidence in the US fell more than expected this month ahead of the Federal Reserve’s policy meeting outcome, due Wednesday.
The University of Michigan’s Consumer Sentiment Index declined to 67.7 this month in a preliminary reading, from 69.5 in August. It was also below the reading of 69.1 projected by a Reuters poll. However, the data also showed that consumers expect inflation to fall on both one-year and five-year bases.
Market participants now await the outcome of the US Federal Open Market Committee’s two-day policy review meeting, starting Tuesday. The CME FedWatch tool showed that 99% of Fed fund futures traders expect a status quo at the meeting. However, traders will monitor Federal Reserve Chair Jerome Powell’s speech for guidance on the central bank’s rate hike trajectory.
“The speech from Powell will influence rupee from here on,” said a dealer at a state-owned bank. “If it is hawkish you can see the rupee rising to 83.30-35 levels.”
During the day, the rupee rose to a high of 83.0875 a dollar as some exporters sold the greenback, but the Indian unit’s gains were erased quickly as oil importers stepped up their dollar purchases, dealers said.
Crude oil prices rose for a third session in a row today due to supply worries in the backdrop of hope of improved demand from China. China reported a higher-than-expected rise in industrial output and retail sales on Friday.
Losses in domestic share indices also weighed on the local unit, dealers said. The Nifty 50 and the BSE Sensex closed 0.3% and 0.4% lower, respectively.
Banks sold the greenback at 83.21-83.22 a dollar, likely on behalf of the Reserve Bank of India to contain runaway depreciation and prevent the Indian unit from breaching its record low of 83.29 a dollar, dealers said.
“RBI seems to have accepted that the rupee is under immense pressure and has allowed the weakness, which could be slow and steady but up for the dollar/rupee,” said Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors LLP.
Crude oil prices have risen for three consecutive weeks to touch their highest level since November and are on track to register their biggest quarterly increase since Russia’s invasion of Ukraine in Jan-Mar last year.
FORWARDS
The premium on the one-year dollar/rupee forward ended flat as dealers exercised caution before the outcome of the Federal Open Market Committee’s meeting on Wednesday, dealers said.
Premiums on forwards of a currency pair are reflective of the interest rate differential between the countries concerned.
The premium on the one-year dollar/rupee contract was 150.50 paise, against 149.25 paise on Friday. On an annualised basis, the premium was at 1.79%, flat against the previous close.
OUTLOOK
Domestic money markets will be closed on Tuesday on account of Ganesh Chaturthi. On Wednesday, the rupee will take cues from movement in the dollar index and crude oil prices, dealers said.
Dealers have pegged key technical support for the rupee at 83.30 a dollar. During the day, the rupee is seen in the range of 83.00-83.50 a dollar.
India Rupee – World FX: Dlr down ahead of slew of central bank meets
MUMBAI – The dollar index was down as investors await the outcomes of a slew of major central banks’ policy meetings this week, with the primary focus being on the US Federal Reserve.
According to the CME FedWatch tool, 99% of Fed fund futures traders expect the US central bank to hold interest rates steady at 5.25-5.50% at the end of its two-day policy review meeting on Wednesday. Traders will monitor Federal Reserve Chair Jerome Powell’s speech for guidance on the US central bank’s rate hike trajectory.
The pound sterling was largely flat against the greenback as traders exercised caution ahead of the Bank of England’s interest rates decision on Thursday. A Reuters poll of 65 economists forecast a final 25-basis-point rate hike at the meeting, before the central bank takes a pause in the backdrop of slowing economic growth.
Financial markets in Japan are closed today on account of ‘Respect for the Aged’ day. Japan’s central bank is widely expected to keep its key interest rate unchanged at (-)0.1% on Friday. Market participants will monitor Bank of Japan Governor Kazuo Ueda’s comments for hints about any chance of a change from the current ultra-loose policy.
At 1449 IST, the dollar index, which gauges the strength of the greenback against its major peers across the world, was at 105.29, against 105.41 on Friday. It was at 105.41 on Thursday. (Ananya Chaudhuri)
India Rupee: Erases gains on dlr buys by oil cos; RBI lends support
MUMBAI – The rupee erased all its earlier gains against the dollar as foreign banks purchased the greenback on behalf of oil marketing companies and other importers, dealers said.
The Indian unit had earlier in the day risen to the day’s high of 83.0875 against the US currency.
Banks sold the greenback at around 83.21-83.22 a dollar level likely on behalf of the Reserve Bank of India to contain runaway depreciation and prevent the Indian unit from breaching record low of 83.29 a dollar level, dealers said. This limited losses for rupee.
“Oilers, importers, seems like they are buying (dollars). Crude oil is almost at $95 a bbl level, they (importers) see possibility of rupee breaching all time-low, so hedging pressure is there,” a dealer at a private bank said. “Nationalised banks are selling (dollars) at these levels, if they leave it, it (rupee) will go lower.”
Crude oil prices rose for a third session in a row on Monday due to worries over supply in the backdrop of hopes of improved demand from China. China reported higher-than-expected rise in industrial output and retail sales on Friday.
At 1322 IST, the October contract of Brent crude oil on the Intercontinental Exchange was at $94.64 a barrel as against $93.93 per bbl on Friday. It was at $93.70 per bbl on Thursday.
Further, losses on local shares also weighed on the local unit, dealers said. At 1322 IST, the Nifty 50 and Sensex were down 0.2% and 0.1%, respectively.
Dealers see key immediate technical support for the rupee at 83.30 a dollar. During the day, the rupee is seen in the range of 82.80-83.20 a dollar. (Ananya Chaudhuri)
India Rupee: Up as dlr dn on weak consumer confidence; US FOMC eyed
MUMBAI – The rupee rose against the dollar today as the dollar index fell in early trade today after data showed consumer confidence in the US fell more than expected this month ahead of the Federal Reserve’s policy meeting outcome, due Wednesday, dealers said.
In the US, the University of Michigan’s Consumer Sentiment Index declined to 67.7 this month in a preliminary reading from 69.5 in August. It was also below the reading of 69.1 projected by a Reuters’ poll. However, the data showed consumers expect inflation to fall on both one-year and five-year basis.
Market participants now await the outcome of the US Fed’s two-day policy review meeting, starting Tuesday. The CME FedWatch tool showed that a whopping 99% of Fed fund futures traders expect a status quo at the meeting. However, traders will closely monitor Fed Chair Jerome Powell’s speech for guidance on the central bank’s future rate hike trajectory.
At 0929 IST, the dollar index, which gauges the strength of the greenback against its major peers across the world, was at 105.26 as against 105.41 on Friday. It was at 105.41 on Thursday.
“We’re seeing the range between 83.00-83.25 (a dollar) today. Traders might be a bit reluctant to take position before FOMC (US federal Open Market Committee meeting),” a dealer at a state-owned bank said. “Earlier today, selling (of dollars) was there; just general intraday positions.”
Crude oil prices trading around the 10-month-high levels also exerted pressure on the Indian unit, dealers said. At 0929 IST, the October contract of Brent crude oil on the Intercontinental Exchange was at $94.30 a barrel as against $93.93 a bbl on Friday. It was at $93.7 a bbl on Thursday.
A fall in local share indices also supported the Indian currency, dealers said. At 0929 IST, the Nifty 50 and Sensex were down 0.3% and 0.2%, respectively.
Dealers see key immediate technical support for the rupee at 83.25 a dollar. During the day, the rupee is seen in the range of 82.80-83.20 a dollar. (Ananya Chaudhuri)
India Rupee – Asia FX:Most dn on caution before US FOMC meet outcome
MUMBAI – Most Asian currencies fell against the dollar today as traders exercised caution ahead of the US Federal Reserve’s policy meet outcome, due Wednesday.
The CME FedWatch tool showed that a whopping 99% of Fed fund future traders expect a status quo at the meeting. However, traders will closely monitor Chair Jerome Powell’s speech for forward guidance on the central bank’s future rate hike trajectory.
The dollar index fell in early trade today, which gave some respite to Asian units. At 0857 IST, the dollar index, which gauges the strength of the greenback against its major peers across the world, was at 105.26 as against 105.41 on Friday. It was at 105.41 on Thursday.
Asian currencies fell in the range of 0.1-0.2% against the greenback, with the Taiwanese dollar emerging as the worst performing currency.
Bucking the trend, the Thai baht rose 0.2% against the greenback. (Ananya Chaudhuri)
India Rupee: Expected range for rupee – Sep 18
MUMBAI – Following are the expected support and resistance levels for the rupee today, as forecasted by leading banks and brokerages in an Informist poll:
(Ananya Chaudhuri)
End
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Rajeev Pai
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