Informist, Thursday, Oct 12, 2023
By Ananya Chaudhuri and Vaishali Tyagi
MUMBAI – The rupee erased all its intraday gains against the dollar and closed lower as banks persistently bought the greenback on behalf of oil marketing companies and other importers, dealers said.
After rising to a high of 83.1200, the Indian currency settled at 83.2425, compared to 83.1875 a dollar on Wednesday. The rupee traded in a tight range of 12 paise against the dollar.
The rupee started the day steady against the US unit at 83.1600, tracking a steady dollar index in early trade, dealers said. The dollar index was steady despite data showing a fall in the US Core Producer Price Index on Wednesday. The US Core Producer Price Index showed producer prices rose 2.8% on year in September against 2.9% in August. The US Producer Price Index, including food, energy, and trade services, showed prices were up 2.2% on year after advancing 2.0% in August.
The data came ahead of CPI data, which is expected to show that inflation moderated last month. The data is expected to provide further cues on whether the Federal Reserve will raise interest rates. Economists polled by Dow Jones expect an increase of 0.3% on month and 3.6% on year.
Meanwhile, minutes of the US Federal Open Market Committee’s September policy meeting showed on Wednesday unanimity among policy makers that interest rates in the US need to stay at higher levels until they are convinced inflation is moving towards the target rate of 2%.
Policymakers in the September meeting differed on whether to go for further monetary tightening, but their individual dot plots indicated one more rate hike by the US Federal Reserve going forward.
At 1634 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 105.74 as against 105.73 on Wednesday. It was at 105.77 on Tuesday.
Shortly after opening, the Indian currency touched the day’s high of 83.1200 against the US currency as banks stepped in to sell dollars on behalf of the exporters, dealers said.
Further, a fall in crude oil prices also supported the Indian unit, dealers said. Oil futures fell after Saudi Arabia pledged to stabilise the market amid the Israel war. This will likely support the rupee, dealers said. The prices fell to as much as $85.18 a bbl during the day. At 1634 IST, the December contract of Brent crude oil on the Intercontinental Exchange was at $86.63 a bbl, as against $85.82 a bbl on Wednesday. It was at $87.65 a bbl on Tuesday.
The Indian unit started to erase gains as banks rushed to buy dollars on behalf of the oil marketing companies and other importers, dealers said.
Dealers also said banks purchased the US currency on behalf of importers who expected the rupee to depreciate further in case geopolitical tension in West Asia escalates. This also weighed on the Indian unit.
During the last leg of the trade, the rupee fell to the day’s low of 83.2450 against the US unit, as foreign banks purchased the greenback for foreign fund outflows from the domestic financial markets, dealers said. “Majorly foreign banks, PSBs (public sector banks) were buying (dollars) and outflows were there, that’s why in last one hour, it (rupee) started moving from 83.17-83.18 (a dollar) level and closed around 83.2475 (a dollar),” a dealer at a state-owned bank said.
Today, both the benhchmark Nifty 50 and Sensex ended 0.1% down.
Throughout the day, traders remained on the sideline exercising caution ahead of US CPI print for September.
On the home front, India’s CPI inflation, due later today, is expected to fall to a three-month low of 5.4% in September because of a sharp decline in tomato prices and a favourable base effect, according to an Informist poll of 21 economists. The estimates in the poll range from 5.2% to 6.2%. The headline inflation was 6.83% in August and 7.41% in September last year.
FORWARDS
Premiums on the one-year dollar/rupee forwards closed higher today as benchmark US 10-year Treasury note fell to a two-week low on Wednesday, dealers said.
The yield on the benchmark 10-year US Treasury note fell to a two-week low as prices rose on safe-haven demand in the backdrop of war in West Asia.
Premiums on forwards of a currency pair are reflective of the interest rate differential between the two countries.
The premium on the one-year, exact-period dollar/rupee forward contract was at 149.58 paise, against 149.55 paise at the close on Wednesday. On an annualised basis, the premium was at 1.79%, against its previous close of 1.78%.
OUTLOOK
On Friday, the rupee will take cues from movement in the dollar index after the release of US CPI print for September, due later today, dealers said.
Dealers said the Indian unit may also track movement in crude oil prices.
“Rupee is expected to trade in a range of 83.10 to 83.40 (a dollar) tomorrow as dollar buyers re-emerge after a 2-day fall (in rupee)”, said Anil Kumar Bhansali, head of treasury and executive director, Finrex Treasury Advisors LLP.
Dealers have pegged key technical support for the rupee at 83.30 a dollar, breaking 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: Mixed ahead of US Sep CPI data; sterling down
MUMBAI – The dollar traded on a mixed note against its major peers as market participants await US CPI data for September, due later today.
The US CPI data for September is expected to provide further cues on whether the Federal Reserve will raise interest rates. Economists polled by Dow Jones expect an increase of 0.3% on month and 3.6% on year.
Earlier, the US core producer price index, which excludes food, energy, and trade services, eased slightly, and registered an increase of 2.8% on year in September compared with 2.9% in August. The US producer price index, including food, energy, and trade services, rose 2.2% on year after advancing 2.0% in August.
At 1519 IST, the dollar index, which measures the strength in the greenback against a basket of six major currencies, was at 105.69 against 105.73 on Wednesday. It was at 105.77 on Tuesday.
The pound sterling fell 0.1% against the dollar as Swati Dhingra, a member of the Bank of England’s Monetary Policy Committee, said higher interest rates could hit younger workers, and those on lower incomes the hardest.
The fall in the UK currency was limited after data from the Bank of England showed the economy expanded 0.2% on month in August, in line with a Reuters poll of economists, after it fell 0.6% in July.
The Australian dollar weakened 0.1% against the greenback, as the International Monetary Fund revised the country’s GDP growth for 2024 down to 1.2% from a projected 1.7% in April.
The Canadian dollar was almost flat against the greenback on weak crude oil prices, and a cautious stance by the market participants ahead of US CPI data.
Bucking the trend, the euro rose 0.1% against the US currency. European Central Bank policymaker Pierre Wunsch said they might have reached a peak in interest rates, with oil prices being a risk to the European economy’s inflation. (Sourabh Kumar)
India Rupee: In narrow range; bks’ dlr buys for oil importers weigh
MUMBAI – The rupee traded in a narrow range of 7 paise against the dollar as banks bought the greenback for oil marketing companies and other importers, which offset the banks’ dollar sales for exporters, dealers said.
“Earlier, in the morning, it (rupee) touched a high of 83.14 (a dollar), and then buying (of dollars) came in, like some corporate buying and oil buying which took it (dollar) higher, but still there are two-way action we are seeing,” a dealer at a private bank said. “I don’t expect it (rupee) to move widely. I think 83.14-83.20 (a dollar) should be the range for the day.”
Dealers said banks purchased the US currency on behalf of importers who expected the rupee to depreciate further in case geopolitical tension in West Asia escalates. This also weighed on the Indian unit.
Further, domestic equities fell, which exerted pressure on the Indian currency. At 1418 IST, both the Nifty 50 and the Sensex were 0.1% lower.
However, the dollar index stayed low ahead of the US CPI data release later today, which supported the Indian currency. The CPI data for September is expected to provide further cues on whether the Federal Reserve will raise interest rates. Economists polled by Dow Jones expect an increase of 0.3% on month and 3.6% on year.
On Wednesday, the US core producer price index for September, which excludes food, energy, and trade services, eased slightly, data showed on Wednesday. It registered an increase of 2.8% on year in September compared with 2.9% in August. The US producer price index, including food, energy, and trade services, rose 2.2% on year after advancing 2.0% in August.
At 1419 IST, the dollar index, which measures the strength in the greenback against a basket of six major currencies, was at 105.70 against 105.73 on Wednesday. It was at 105.77 on Tuesday.
On the home front, India’s CPI inflation, due later today, is expected to fall to a three-month low of 5.4% in September because of a sharp decline in tomato prices and a favourable base effect, according to an Informist poll of 21 economists. The estimates in the poll range from 5.2% to 6.2%. The headline inflation was 6.83% in August and 7.41% in September last year.
Dealers see immediate technical support for the rupee at 83.30 a dollar. During the day, the rupee is seen in the range of 83.00-83.30 a dollar. (Sourabh Kumar and Viashali Tyagi)
India Rupee – Asia FX:Most down ahead of US Sep CPI; Thai baht rises
MUMBAI – Most Asian currencies weakened against the dollar as market participants were cautious ahead of the release of the US CPI data for September, due later today.
The Taiwan dollar fell 0.3% against the greenback even as the country’s exports rose 3.4% on year to $38.81 bln in September amidst heightened demand for semiconductors as the use of generative artificial intelligence accelerates.
The Philippines peso was steady against the dollar, as the governor of Bangko Sentral ng Pilipinas, the central bank of the Philippines, said it is not ruling out a 25-basis-point hike in its policy rate in November. His comments came a few days after data showed that inflation in September rose to a four-month high of 6.1%, surpassing all economists’ estimates in a Bloomberg survey.
The Thai baht strengthened 0.5% against the dollar due to a weak dollar index and after the Bank of Thailand indicated that its current policy rate, which is the highest in a decade, is expected to stay for longer. The central bank said it expects the current policy rate to be neutral, aiding economic recovery, which is expected to pick up pace next year along with higher inflation, as the government plans stimulus measures.
Meanwhile, the dollar index remained steady as the US core producer price index, which excludes food, energy, and trade services, eased slightly, and registered an increase of 2.8% on year in September compared with 2.9% in August. The US producer price index, including food, energy, and trade services, rose 2.2% on year after advancing 2.0% in August.
The data came ahead of September’s CPI data, which is expected to show that inflation moderated last month. The report is expected to provide further cues on whether the Federal Reserve will raise interest rates. Economists polled by Dow Jones expect an increase of 0.3% on month and 3.6% on year.
At 0929 IST, the dollar index, which measures the strength in the greenback against a basket of six major currencies, was at 105.44 as against 105.73 on Wednesday. It was at 105.77 on Tuesday.
Further, US Federal Reserve officials differed on the need for further rate hikes to contain inflation, its September meeting minutes, released on Wednesday, showed. However, all the officials reiterated the need to bring inflation back to the 2% target.
Both the Malaysian ringgit and the South Korean won fell 0.2% against the dollar. (Sourabh Kumar and Vaishali Tyagi)
India Rupee: Expected range for rupee – Oct 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:
(Vaishali Tyagi)
End
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Deepshikha Bhardwaj
For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.
Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.
Informist Media Tel +91 (22) 6985-4000
Send comments to [email protected]
© Informist Media Pvt. Ltd. 2023. All rights reserved.
Source: Cogencis
