nformist, Wednesday, Oct 4, 2023
By Pratiksha
MUMBAI – After trading in a narrow range of 8 paise throughout the day, the rupee settled slightly lower against the dollar today due to dollar purchases on behalf of oil marketing companies and other importers, dealers said.
However, the Reserve Bank of India’s continued efforts to keep the currency from hitting a record low and easing of the dollar index during European trade limited losses for the Indian unit, the dealers said. The rupee had hit a record low of 83.29 a dollar in October last year.
Today, the rupee settled at 83.2400 a dollar, as against 83.2050 a dollar at the previous close.
The Indian unit began the day largely steady against the dollar as banks’ dollar sales, likely on behalf of the RBI in the offshore non-deliverable forwards market, offset the impact of a strong dollar, dealers said.
The dollar index rose to an over 10-month-high on Tuesday after data showed that job openings in the US were stronger than expected. Job openings in the US were up 690,000 at 9.610 mln on the last day of August, the most in just over two years. Data for July was revised higher to show 8.920 mln job openings instead of the previously reported 8.827 mln. Economists polled by Reuters had forecast 8.800 mln job openings in August.
More than three hours into the trade, the local unit fell to a low of 83.2650 a dollar, just shy of the record low level of 83.29, as banks rushed to purchase the greenback on behalf of oil marketing companies, dealers said.
“There is still considerable demand (for dollars) in the market. Oilers (oil companies) are still active,” said a dealer with a private bank.
Prices of crude oil fell almost 1% today as Saudi Arabia’s announcement to continue crude output cuts to the end of 2023 was offset by demand concerns emanating from macroeconomic risks.
At 1618 IST, the December contract of Brent crude oil on the Intercontinental Exchange was at $89.89 a barrel, as against $90.92 a bbl on Tuesday. It was at $90.71 a bbl on Monday.
However, the central bank likely stepped in to intervene through dollar sales at around 83.26 a dollar level, to prevent the local currency from testing a record low.
“They are protecting 83.30 even today, but it seems like it is just a matter of time that the level will be reached,” said a dealer with a state-owned bank.
Further, some banks bought dollars on behalf of foreign portfolio investors, who were looking to withdraw funds from the domestic equities, dealers said.
The benchmark Nifty 50 and the Sensex ended 0.5% and 0.4% lower, respectively.
Meanwhile, the dollar index came off the over 10-month high level it touched on Tuesday during European trade, as the pound sterling rose after S&P Global reported that the UK services PMI reading of 49.3 for September was largely unchanged from August’s reading of 49.5 and higher than expectations. This provided support to the rupee during the last leg of the trade, dealers said.
At 1618 IST, the dollar index, which measures the strength of the greenback against major currencies, was at 106.75, against 107.08 on Tuesday. It was at 107.03 on Monday. On Tuesday, the index had risen to an over 10-month high of 107.35.
FORWARDS
Despite a surge in the US Treasury yields, premiums on the one-year dollar/rupee forwards settled at an over three-month high today as the Reserve Bank of India did a sell/buy swap, wherein it sells dollars for immediate delivery and purchases them for delivery later, dealers said.
Some dealers said the central bank conducted sell/buy swap in near-term forward tenures.
Meanwhile, the yield on the benchmark 10-year US Treasury note rose to a 16-year high on Tuesday amid concerns that the US Federal Reserve would continue to hike interest rates for an extended period, following an unexpected surge in job openings in August.
Premiums on forwards of a currency pair are reflective of the interest rate differential between the two countries.
Further, some banks bought dollars for forward delivery on behalf of oil and other importers, which further supported the premiums, dealers said.
The premium on the one-year, exact-period dollar/rupee forward contract was at 154.94 paise, against 153.38 paise at close Tuesday. On an annualised basis, the premium was at 1.85%, against its previous close of 1.83%. Premiums rose to a high of 1.86% earlier today.
OUTLOOK
On Thursday, the rupee will take cues from movement in the dollar index and crude oil prices, dealers said.
Dealers expect the central bank to continue intervening through dollar sales to prevent the Indian unit from falling to a record low.
Market participants now await the RBI’s Monetary Policy Committee meeting outcome on Friday. According to a poll by Informist, India’s rate-setting panel is widely expected to leave the policy repo rate unchanged at 6.50% for the fourth consecutive meeting.
Dealers have pegged key technical support for the rupee at 83.30 a dollar, a break of which can push the rupee to 83.50 a dollar.
During the day, the rupee is seen in the range of 83.00-83.50 a dollar.
India Rupee – World FX: Sterling up on strong UK PMI data; dlr eases
MUMBAI – The pound sterling strengthened 0.2% against the greenback as S&P Global reported that the UK aervices PMI reading of 49.3 for September was largely unchanged from August’s reading of 49.5 and higher than expectations.
The euro rose 0.2% against the dollar as the unemployment rate in the Eurozone stood at 6.4%, the lowest ever for the bloc. Rising wages in the Eurozone are keeping up with domestic inflation, but the salary growth is expected to moderate in the coming months, European Central Bank Chief Economist Philip Lane said at an event on Tuesday.
The Canadian dollar was up 0.1% against the US currency as Bank of Canada Deputy Governor said at the Montreal Chamber of Commerce on Tuesday that Canadian businesses had made larger and more frequent price changes since the pandemic, passing on higher costs to consumers, and that the behaviour could stoke inflation.
The Japanese central bank made an engineered intervention after its local currency touched a low of 150.1600 against the dollar, sparking a sell-off in the greenback on Tuesday. Today, the Japanese currency remained flat against the dollar.
The dollar index, which measures the strength of the greenback against major currencies, fell below the crucial mark of 107 during European trading hours. At 1432 IST, the index was 106.91, against 107.08 on Tuesday. It was at 107.03 on Monday. On Tuesday, the index rhad risen to a fresh 10-month high of 107.21.
US yields rose to a 16-year high of over 4.8% after positive job openings data from the US. The job openings were up 690,000 at 9.610 mln as of Aug 31, the most in just over two years. Data for July was revised higher to show 8.920 mln job openings instead of the previously reported 8.827 mln. (Sourabh Kumar and Vaishali Tyagi)
India Rupee: Premiums at over 3-mo high on RBI sell/buy swap
MUMBAI – Despite a surge in the US Treasury yields, premiums on the one-year dollar/rupee forwards rose to an over three-month high today as the Reserve Bank of India did a sell/buy swap, wherein it sells dollars for immediate delivery and purchases them for delivery later, dealers said.
“They are selling the dollar in the spot to stabilise the rupee today and buying the dollars at a future date,” said a dealer with a brokerage firm. “Basically, they are trying to protect both the markets.”
Some dealers said the central bank conducted sell/buy swap in near-term forward tenures.
Today, state-owned banks likely sold the greenback on behalf of the RBI in the domestic spot market to prevent the Indian unit from hitting a record low. The rupee hit a record low of 83.29 in October last year.
Meanwhile, the yield on the benchmark 10-year US Treasury note rose to a 16-year high on Tuesday amid concerns that the US Federal Reserve would continue to hike interest rates for an extended period, following an unexpected surge in job openings in August.
Premiums on forwards of a currency pair are reflective of the interest rate differential between the two countries.
Further, some banks bought dollars for forward delivery on behalf of oil and other importers, which further supported the premiums, dealers said.
Market participants now await the RBI’s Monetary Policy Committee meeting outcome on Friday. According to a poll by Informist, India’s rate-setting panel is widely expected to leave the policy repo rate unchanged at 6.50% for the fourth consecutive meeting.
At 1430 IST, the premium on the one-year, exact-period dollar/rupee forward contract was at 154.38 paise, against 153.38 paise at close Tuesday. On an annualised basis, the premium was at 1.84%, against its previous close of 1.83%. Premiums rose to an over three-month high of 1.86% earlier today. (Pratiksha)
India Rupee:In thin band; RBI’s likely dlr sales offset oil cos’ buys
MUMBAI – The rupee remained in a narrow range against the dollar as banks’ dollar buys for oil companies were offset by their dollar sales likely on behalf of the Reserve Bank of India, dealers said. So far, the rupee has moved in a range of 5 paisa.
“We are bullish on dollar, but there is very strong resistance around 83.28-83.29 a dollar,” a dealer with a big state-owned bank said. “US jobs data drove the yields on US Treasuries higher, especially the 2-year and the 10-year, which is also pushing the dollar upwards,” he said.
Dealers said the Reserve Bank of India likely sold dollars around the 83.28 level to prevent it from falling below the record low level of 83.29 a dollar, touched on Oct 20, 2022.
The dollar index remained near a 10-month-high, which also pressured the rupee, dealers said. The greenback rose on the back of a stronger-than-expected jobs report from the US.
Job openings in the US were up 690,000 at 9.610 mln as on Aug 31, the most in just over two years. Data for July was revised higher to show 8.920 mln job openings instead of the previously reported 8.827 mln. Economists polled by Reuters had forecast 8.800 mln job openings in August, data from the US Labor Department showed.
At 1320 IST, the dollar index was at 107.02, against 107.08 on Tuesday. It was at 107.03 on Monday. On Tuesday, the index rose to a fresh 10-month high of 107.21.
Dealers said volumes in the currency market remained low today.
Dealers see immediate 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. (Kabir Sharma)
India Rupee – Asia FX: Most dn on firm dlr after strong US jobs data
MUMBAI – Most Asian currencies were down against the dollar as the dollar index remained near a 10-month-high after US job openings came in stronger than expected.
Job openings in the US were up 690,000 to 9.610 mln on the last day of August, the most in just over two years. Data for July was revised higher to show 8.920 mln job openings instead of the previously reported 8.827 mln. Economists polled by Reuters had forecast 8.800 mln job openings in August, data from the US Labor Department showed.
The Thai baht was the worst performing currency amongst its Asian peers, falling by 0.3% against the greenback. Thailand’s inflation risks could weigh on the country’s growth outlook, Bank of Thailand governor Sethaput Suthiwartnarueput said. Further, there was an upside inflation risk brought on by the El Nino weather pattern pushing up food prices, plus higher oil prices, he said.
The Indonesian rupiah fell 0.3% against the US unit as Bank Indonesia was open to the possibility of buying bonds to manage yields, according to a Reuters report.
The Malaysian ringgit fell 0.2% against the US currency after the seasonally-adjusted S&P Global Malaysia Manufacturing PMI fell further to 46.8 in September, from 47.8 in August.
At 1034 IST, the dollar index was at 107.07, as against 107.08 on Tuesday. It was at 107.03 on Monday. On Tuesday, the index rose to a fresh ten-month high of 107.21.
On contrary to its Asian peers, the Philippines peso gained 0.1% against the dollar as the International Monetary Fund expects Philippine inflation to average close to 6.0%, before easing to around 3.5% in 2024, requiring the central bank to hold on to higher interest rates. (Sourabh Kumar and Vaishali Tyagi)
India Rupee:Steady as likely dlr sales by RBI in NDF offset firm dlr
MUMBAI – The rupee remained steady against the greenback despite a strong dollar today, as banks sold the greenback, likely on behalf of the Reserve Bank of India in the offshore non-deliverable forwards market, dealers said.
“The strength of the US dollar index and rising US bond yields are exerting downward pressure on the rupee’s value. One notable factor is the consistent intervention by the RBI at lower rupee levels,” said Amit Pabari, managing director, CR Forex. “This intervention became evident after the release of forex reserves, which had declined to a four-month low,” he said.
The dollar remained firm at a near 10-month-high after US job openings came in stronger than expected, dealers said.
Job openings in the US were up 690,000 to 9.610 mln on the last day of August, the most in just over two years. Data for July was revised higher to show 8.920 mln job openings instead of the previously reported 8.827 mln. Economists polled by Reuters had forecast 8.800 mln job openings in August, data from the US Labor Department showed.
However, the dollar index came under pressure from suspected intervention by the Bank of Japan near levels of 150 yen a dollar, dealers said.
On Tuesday, the Japanese yen touched a low of 150.1600 against the dollar, sparking a sell-off in the greenback on news of intervention by the Japanese central bank.
At 0947 IST, the dollar index was at 107.17, against 107.08 on Tuesday. It was at 107.03 on Monday. On Tuesday, the index rose to a fresh 10-month high of 107.21.
Dealers said the RBI might continue to intervene in the market to prevent the rupee from falling beyond its record low level of 83.29 a dollar, hit in October 2022.
Dealers see immediate 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. (Kabir Sharma)
India Rupee: Expected range for rupee – Oct 4
MUMBAI – Following are the expected support and resistance levels for the rupee today, as forecasted by leading banks and brokerages in an Informist poll:
(Sourabh Kumar and Vaishali Tyagi)
End
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Vandana Hingorani
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