Informist, Monday, Oct 25, 2021
By Arushi Jain
MUMBAI – The rupee fell against the dollar in thin trade today because state-owned banks purchased the dollar on behalf of oil marketing companies, noting elevated Brent crude oil prices, said dealers.
After moving in a range of only 14 paise, the Indian rupee closed at 75.0775 a dollar today compared with 74.8900 at 1530 IST on Friday.
Prices of Brent crude futures surged beyond $86 per barrel amid easing of travel restrictions globally.
“Brent crude oil is at a striking distance of 2018 highs near $87 a bbl,” said Anindya Banerjee, deputy vice president, currency derivatives and interest rate derivatives at Kotak Securities Ltd, in a note today. “If it continues to inch higher, with FPIs (foreign portfolio investors) taking money out of India, rupee can come under selling pressure.”
At 1611 IST, the December contract of Brent crude on the Intercontinental Exchange was at $86.09 per bbl compared with $85.53 a bbl at close on Friday. Prices soared to the day’s high of $86.43 a bbl today.
Some dealers said banks bought dollar also on behalf of importers at relatively lower dollar/rupee levels, expecting the rupee to depreciate in the coming days. This further weighed on the Indian currency.
Concerns over the latest outbreak of COVID-19 in China also weighed on investor sentiment for emerging-market assets, including the Indian unit, said dealers.
China’s new COVID-19 infections will increase in coming days and the areas affected by the epidemic may continue to expand, a health official said.
In China, restrictions have been imposed across several regions as the country reported 26 new confirmed coronavirus cases on Saturday.
Moreover, dollar recovered in European trade as investors do not expect the Bank of Japan and the European Central Bank to tighten policy in their respective meetings on Thursday.
Earlier in the day, dollar traded near a one-month low as investors continued to expect that interest rates may be hiked by other major central banks before the US Federal Reserve.
At 1611 IST, the dollar index–a measure of strength in the greenback against a basket of six major currencies–was at 93.76 compared with 93.61 on Friday. It was at 93.77 on Thursday.
“Traders have now started to take bets on the relative pace of the looming rate hike cycle rather than just its start,” said a dealer with a brokerage. “Fed members have been repeatedly speaking about the inflation risks which may lead to an aggressive rate hike cycle and prop up the dollar.”
The local unit fell to the day’s low of 75.1025 a dollar today.
Losses in the Indian currency were limited as foreign banks stepped in to sell dollars for overseas investments into Indian companies raising funds through various means, dealers said.
The 6.3-bln-rupee initial public offer of FSN E-Commerce Ventures Ltd, the parent company of fashion brand Nykaa, will open on Thursday and close on Monday.
Additionally, companies like Policybazaar, Paytm, Anand Rathi Wealth also got the Securities and Exchange Board of India’s approval to launch their IPOs.
The rupee saw the day’s high at 74.9625 a dollar.
Traders now await growth data in the US and central bank meetings in the Eurozone, Japan and Canada this week.
FORWARDS
The premium on dollar/rupee forwards contract ended a tad up because banks purchased dollars for forward delivery on behalf of importers, dealers said.
On an annualised basis, premium on the one-year, exact-period dollar/rupee contract was at 4.59%, flat against Friday. The premium was at 344.57 paise, compared with 343.90 paise on Friday.
OUTLOOK
On Tuesday, the rupee will take opening cues from movement in the dollar index and US bond yields.
The rupee may also track movement in the Chinese yuan and Brent crude oil prices, said dealers.
Private and foreign banks are expected to sell dollars for overseas investors ahead of Nykaa’s IPO, which may provide some support to the rupee, dealers said.
“Over this week, the focus will be on IPO-related inflows as well. Therefore, we expect a two-way market within an expected range of 74.80/$1 and 75.40/$1 on spot,” Banerjee added in the note.
The rupee is seen in the 74.8000-75.2000 a dollar range on Tuesday.
India Rupee – World FX: Dollar index rebounds; Australian dollar firm
NEW DELHI – The dollar index recovered and gained slightly as the 10-year US treasury yield recouped losses and steadied in European trade.
At 1555 IST, the 10-year US treasury yield was at 1.66%, unchanged from Friday. It had slipped to the day’s low of 1.64%.
The dollar index, which measures the strength of the US currency against six other major units, fell 0.1% earlier today after Federal Reserve Chair Jerome Powell said on Friday that it was “time to taper” but not for interest rate hikes yet.
Powell’s remarks come at a time when investors have already started trimming long dollar positions in anticipation that other central banks will move sooner.
At 1555 IST, the dollar index was at 93.75 compared with 93.61 on Friday. It had touched a low of 93.48 today.
The pound sterling erased most gains, but was 0.1% higher against the dollar as recent data suggested that inflation was set to increase in the UK and investors expect the Bank of England to raise interest rates in the policy meeting scheduled for next week.
Commodity-linked currencies like the Australian dollar continued to rise as crude oil prices remained near three-year highs. At 1602 IST, the December contract of Brent crude on the Intercontinental Exchange was at $86.20 per barrel compared with $85.53 a bbl at close on Friday. (Shubham Rana)
India Rupee: Falls on China’s COVID worry, weak local equities
MUMBAI – The rupee weakened against the dollar today because rising cases of coronavirus in China dampened investor sentiment for emerging-market assets, including the rupee, dealers said.
The Indian rupee tracked losses in the Chinese yuan that fell nearly 0.1% against the dollar today, dealers added.
Moreover, a sharp fall in local benchmark equity indices also led to depreciation in the local unit, said dealers.
At 1032 IST, the Nifty 50 and the Sensex were down nearly 0.4% and 0.3%, respectively.
Meanwhile, elevated Brent crude oil prices were also said to have weighed on the rupee, according to dealers.
High crude oil prices worsen India’s current account deficit by increasing the import bill and, hence, weigh on the rupee.
At 1032 IST, the December contract of Brent crude on the Intercontinental Exchange was at $86.28 per bbl compared with $85.53 a bbl at close on Friday.
Dealers have now pegged immediate key technical support for the rupee at 75.2000 a dollar.
“The latest outbreak of COVID-19 cases in China will also play on investor sentiments in the Asian equity markets,” said a dealer with a brokerage.
“It will be interesting to see how much pressure can the domestic market withstand as on the positive side, IPO (initial public offer) related inflows are also expected.”
The IPO of FSN E-Commerce Ventures Ltd, the parent company of fashion brand Nykaa, will open on Thursday and close on Monday to raise nearly 6.3 bln rupees.
The Indian unit is expected to move in a range of 74.80-75.20 a dollar during the day. (Arushi Jain)
India Rupee – Asia FX: Most flat on fresh COVID outbreak in China
NEW DELHI – Most Asian currencies were flat against the dollar in early trade today as concerns over the fresh outbreak of COVID-19 cases in China weighed on investor sentiment.
Following the resurgence in cases, authorities in China have ramped up screening and testing, and several regions have imposed restrictions on cross provincial travel. On Sunday, the authorities said there were increasing chances of the latest outbreak spreading further.
The South Korean won rose 0.7% after the country’s President today said South Korea would take steps towards a gradual return to normal life from the COVID-19 pandemic next month, as the nation’s vaccination rate surpassed the key milestone of 70%.
The Thai baht rose 0.6% buoyed by the government’s announcement last week to allow quarantine-free entry to travellers from 46 countries and territories, including the US, China and the UK, starting Nov 1.
Meanwhile, the Indonesian rupiah fell 0.5% after Indonesia’s central bank left its benchmark interest rate unchanged and extended policy support to boost domestic demand. (Pratiksha)
India Rupee: Expected range for rupee – Oct 25
MUMBAI – The following are the expected support and resistance levels for the rupee, as forecast by leading banks and brokerages in an Informist poll:
(Arushi Jain)
End
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Arshad Hussain
Cogencis news is now Informist. 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 (11) 4220-1000
Send comments to [email protected]
© Informist Media Pvt. Ltd. 2021. All rights reserved.
Source: Cogencis