By Arushi Jain
MUMBAI – The rupee fell sharply against the dollar today because foreign banks persistently purchased the US unit on account of foreign fund outflows from Indian equities and as the dollar strengthened globally, said dealers.
The rupee today settled at 73.8700 compared with 73.6100 a dollar at 1530 IST on Tuesday. The Indian currency moved in a range of 21 paise through the day.
Some foreign banks purchased dollars on account of stake sale by the Carlyle Group in SBI Cards and Payment Services Ltd, dealers said.
The US-based private equity firm will nearly halve its stake in the credit card entity for as much as $443 mln, as per reports.
Some dealers said that banks also purchased the dollar for likely repatriation of extra funds brought by foreign portfolio investors last week for investment into Indian equities on account of the semi-annual rebalancing of FTSE index.
These dollar purchases dragged the rupee to the day’s low of 73.9300 a dollar. The rupee has weakened nearly 1.2% so far this month.
“Pre FOMC (Federal Open Market Committee meeting) dollar bids were seen across the board, some short covering also happened” said a dealer with a big state-owned bank.
Some banks were said to have placed fresh bets in favour of the dollar on behalf of traders and covered their previous bets in favour of the Indian unit, as the US unit remained firm in European trade, dealers said.
At 1629 IST, the dollar index, which measures the strength of the US currency against six major units, was at 93.19 compared to 93.20 on Tuesday. It was at 93.28 on Monday. This further weighed on the sentiment for the Indian unit.
A UK-based bank and a US-based bank were among the major buyers of the greenback, according to dealers.
However, during first half of the trading session, the rupee had risen to as much as 73.6500 a dollar as some state-owned banks were said to have sold dollars for exporters, who may have wanted to hedge near-term receivables at higher dollar/rupee levels, dealers said.
Dealers said that a large Indian corporate also sold dollars during the later part of the trade, when the rupee had weakened to near 73.8500-73.9000 a dollar levels.
Foreign banks also stepped in to sell dollars for overseas investments into Indian companies raising funds through initial public offers and other means, dealers said.
Today, the Indian unit had opened lower at 73.7000 a dollar today because the US currency held near a one-month high against major currencies in early Asian trade, as investors were cautious ahead of the outcome of the US Federal Reserve’s policy meeting later today.
The policy outcome is expected to indicate when the Fed will open discussions on reducing its monthly asset purchases of $120 bln.
“Though the markets are still divided regarding the expected timing of bond taper between November and December, a taper seems pretty evident within the current year,” said a dealer with a brokerage firm. “Another important takeaway from today’s meeting would be the dot-plot which charts the interest rates projections for the future.”
Fed Chair Jerome Powell had said earlier that tapering of the central bank’s stimulus could begin this year.
Separately, risk-sensitive currencies including the rupee recovered losses as risk appetite improved after Evergrande Group said today that it would make a bond interest payment on Thursday, diminishing immediate fears of a default that could trigger a global financial crisis.
The Chinese property developer is said to have around $300 bln in debt, and is due to pay $83.5 mln in interest on Thursday and $47.5 mln on Sep 29.
However, investors were worried as it was still not known whether the developer would be able to pay the coupon on its offshore dollar bonds, due on Thursday.
| 1530 IST | 1000 IST | HIGH | LOW | PREVIOUS
(AT 1530 IST) |
| 73.8700 | 73.7000 | 73.6500 | 73.9300 | 73.6100 |
FORWARDS
The premium on dollar/rupee forwards contracts ended lower because foreign banks sold the US unit for forward delivery on behalf of exporters, dealers said.
Exporters were said to be active in the spot market as well, they added.
On an annualised basis, premium on the one-year, exact-period dollar/rupee contract was at 4.39%, versus 4.41% on Tuesday. The premium was at 326.39 paise, compared with 324.63 paise on Tuesday.
OUTLOOK
On Thursday, the rupee may take opening cues from overnight movement in the dollar index and US bond yields after the outcome of the Fed’s policy meeting at 2330 IST.
Foreign banks are expected to continue to sell dollars, likely for foreign fund inflows into Indian equities raising funds via various means, at relatively higher dollar/rupee levels, said dealers.
The rupee is seen at 73.6000-74.2500 a dollar on Thursday.
India Rupee: Remains sharply down as banks buy dlrs for FX outflows
| AT 1320 IST | 1000 IST | HIGH | LOW | PREVIOUS
(AT 1530 IST) |
|
| Spot rupee per $1 | 73.8500 | 73.7000 | 73.6500 | 73.8575 | 73.6100 |
MUMBAI – The rupee remained sharply lower against the dollar today because foreign banks purchased dollars on account of stake sale by the Carlyle Group in SBI Cards and Payment Services Ltd, dealers said.
The US-based private equity firm will nearly halve its stake in the credit card entity for as much as $443 mln, reports said.
A UK-based bank and a US-based bank were among the major buyers of the dollar, according to dealers.
Some banks were said to have placed fresh bets in favour of the dollar on behalf of traders, which further weighed on sentiment for the Indian unit, dealers said.
The dollar remained elevated against a basket of major currencies as traders were cautious ahead of the US Federal Reserve’s policy meeting outcome later today.
At 1320 IST, the dollar index was at 93.21 compared to 93.20 on Tuesday. It was at 93.28 on Monday.
With key technical support for the rupee pegged at 73.90 a dollar, the Indian unit is expected to trade in a range of 73.6000-73.9000 a dollar during the day. (Arushi Jain)
India Rupee: Falls amid caution ahead of Fed meet outcome later today
| AT 1045 IST | 1000 IST | HIGH | LOW | PREVIOUS
(AT 1530 IST) |
|
| Spot rupee per $1 | 73.7325 | 73.7000 | 73.6500 | 73.7450 | 73.6100 |
MUMBAI – The rupee fell against the dollar today because the US unit held near a one-month high against major currencies as investors across the world were cautious ahead of the outcome of the US Federal Reserve’s two-day policy meeting later today.
At 1045 IST, the dollar index was at 93.25 compared to 93.20 on Tuesday. It was at 93.28 on Monday.
The policy outcome is expected to indicate when the US central bank will open discussions on reducing its monthly asset purchases, said dealers.
The Indian rupee was also weighed due to worries over a likely default by Chinese property developer Evergrande as the company inched closer to a key deadline where it risks a default on payments.
The Evergrande Group is said to have around $300 bln in debt and is due to pay $83.5 mln in interest on Thursday and $47.5 mln on Sep 29.
However, the fall in the local unit was limited because foreign banks stepped in to sell dollars for overseas investments into Indian companies raising funds through initial public offers and other means, said dealers.
Some state-owned banks were also said to have sold dollars for exporters that may have wanted to hedge near higher dollar/rupee levels of 73.70 a dollar, dealers added.
“Some (foreign fund) inflows will be seen today, and we also see the Evergrande worry easing, so that could push the rupee up,” said a dealer with a state-owned bank.
The Indian unit is expected to trade in a range of 73.5500-73.8000 a dollar during the day. (Arushi Jain)
India Rupee: Expected range for rupee – Sep 22
MUMBAI – The following are the expected support and resistance levels for the rupee, as forecast by leading banks and brokerages in an Informist poll:
| SUPPORT | RESISTANCE | |
| Big state-owned bank | 73.90 | 73.50 |
| State-owned bank | 73.85 | 73.55 |
| Private bank | 73.85 | 73.55 |
| Foreign bank | 73.85 | 73.58 |
| Brokerage firm | 73.95 | 73.65 |
(Arushi Jain)
End
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Mainak Moitra
Source: Cogencis
