Informist, Tuesday, May 31, 2022
By Pratiksha and Srijonee Bhattacharjee
NEW DELHI – The rupee ended lower against the dollar today, but managed to erase a considerable portion of its intraday losses due to sales of the greenback by the Reserve Bank of India in the last leg of trade.
After falling to the day’s low of 77.6950 a dollar, the Indian unit settled at 77.6400 a dollar today. The unit kept itself within a narrow range of 8 paise through the day.
The rupee began the day at 77.6475 a dollar, down with a gap of 11 paise, because crude oil prices surged after the European Union agreed to slash oil imports from Russia by the end of this year, dealers said.
The sanctions are fuelling worries in an already-strained tighter market, as demand is expected to rise ahead of the peak US and European summer driving season.
On Monday, European Union leaders agreed in principle to cut 90% of oil imports from Russia by the end of this year, resolving a deadlock with Hungary over the bloc’s toughest sanction yet on Moscow since the invasion of Ukraine three months ago, as per reports.
The rise in prices was also because demand from China is expected to pick up after the easing of COVID-19 curbs. Shanghai announced an end to its two-month-long COVID-19 lockdown, and will permit the vast majority of people in China’s largest city to step out of their homes from Wednesday.
At 1606 IST, the July contract of Brent crude oil on the Intercontinental Exchange was at $123.60 a bbl against the previous close of $121.67 a bbl. It was at $119.43 on Friday.
After the market opened, the rupee gradually made its way to the day’s low of 77.6950 a dollar as some state-owned banks persistently purchased dollars on behalf of oil marketing companies, dealers said.
However, the rupee couldn’t extend its losses and moved within a narrow range of 77.62-77.69 a dollar throughout the day, as exporters continuously sold the greenback, dealers said.
“The 77.70 (a dollar) level was watchful since the beginning of trade,” a dealer with a state-owned bank said. “There was considerable buying (of dollars) from oil importers but the selling (of dollars) was also good.”
A fall in domestic equity indices also dampened sentiment for the Indian currency, according to dealers. The Nifty 50 and the Sensex ended 0.5% and 0.6% lower, respectively.
During the final 15 minutes of trade, the rupee erased almost 8 paise of losses and closed at 77.6400 a dollar. Dealers said the Reserve Bank of India intervened through greenback sales at the last moment to prevent the rupee from breaching the support level of 77.70 a dollar.
ORWARDS
Premiums on dollar/rupee forwards fell because exporters sold dollars for forward delivery noting the fall in the rupee in the spot market, dealers said.
The premium on the one-year, exact-period dollar/rupee contract was at 288.62 paise, as against 295.95 paise on Monday. On an annualised basis, the premium was 3.72% as against the previous close of 3.82%.
OUTLOOK
On Wednesday, the rupee will take cues from overnight movement in the dollar index and prices of Brent crude oil, dealers said.
“RBI’s intervention can be expected if crude continues on this trend for the next few days. 77.70 (a dollar) will be watched,” a dealer with a state-owned bank said.
Dealers have now pegged strong key technical support for the rupee at 77.70 a dollar.
During the day, the rupee is seen within a range of 77.40-77.80 a dollar.
India Rupee – World FX: Dollar rebounds on rise in US Treasury yields
MUMBAI – The dollar rebounded against major currencies today as US Treasury bond yields inched higher.
At 1533 IST, the yield on the benchmark 10-year Treasury note was at 2.83% as against 2.74% on Friday.
The US Treasury yields climbed as investors continued to monitor key economic data, including non-farm payrolls report due on Friday.
At 1533 IST, the dollar index, which measures the strength of the US currency against a basket of six major currencies, was at 101.81 compared with 101.32 on Monday.
The euro remains weak despite higher than expected inflation data setting the stage for the European Central Bank to act on rates lift-off.
With the European Union closing ranks to cut 90% of Russian oil imports by the end of this year, inflation is unlikely to be tamed any time soon, even though markets expect an aggressive 115 bps of rate hikes in the last six months of the year. (Richard Fargose)
India Rupee: Premiums fall as exporters sell forward dollars on weak rupee
MUMBAI – Premiums on dollar/rupee forwards fell because exporters sold dollars for forward delivery noting the fall in the rupee in the spot market, dealers said.
The premium on the one-year, exact-period dollar/rupee contract was at 290.85 paise, as against 295.95 paise on Monday. On an annualised basis, the premium was 3.74% as against the previous close of 3.82%.
The rupee fell due to a sharp rise in oil prices, dealers said. Crude oil prices surged after the European Union agreed to reduce oil imports from Russia by the end of this year.
On Monday, EU leaders agreed in principle to cut 90% of oil imports from Russia by the end of this year, resolving a deadlock with Hungary over the bloc’s toughest sanction yet on Moscow since the invasion of Ukraine three months ago, according to reports. (Srijonee Bhattacharjee)
India Rupee: Remains down on oil cos’ dollar buys; exporters’ dollar sales aid
NEW DELHI – The rupee remained down against the greenback as some state-owned banks persistently purchased dollars on behalf of oil marketing companies, dealers said.
Crude oil prices surged after the European Union agreed to reduce oil imports from Russia by the end of this year.
On Monday, EU leaders agreed in principle to cut 90% of oil imports from Russia by the end of this year, resolving a deadlock with Hungary over the bloc’s toughest sanction yet on Moscow since the invasion of Ukraine three months ago, according to reports.
At 1339 IST, the July contract of Brent crude oil on the Intercontinental Exchange was at $123.56 a bbl, against the previous close of $121.67 a bbl.
However, losses in the Indian unit were restricted as some banks stepped in to sell dollars for exporters who wanted to take advantage of relatively higher dollar/rupee levels, dealers said.
Dealers have now pegged immediate key technical support for the rupee at 77.75 a dollar.
For the rest of the day, the Indian unit is seen at 77.4000-77.8000 a dollar. (Pratiksha)
India Rupee – Asia FX: Most units down as crude oil prices surge
MUMBAI–Asian currencies weakened against the US dollar today, as Brent oil futures traded near $123 per bbl due to worries of tightening global supplies amid a European Union ban on Russian oil and increasing demand from China after easing of lockdowns.
On Monday, European Union leaders agreed in principle to cut 90% of oil imports from Russia by the end of this year, resolving a deadlock with Hungary over the bloc’s toughest sanction yet on Moscow, as per reports.
Rise in the US Treasury yields also weighed on the Asian currencies.
While most units were down 0.1-0.3%, the South Korean won gained 0.2% tracking broader equity market sentiment. (Richard Fargose)
India Rupee: Falls as crude oil prices soar, domestic equities slip
NEW DELHI – The rupee fell against the greenback today because crude oil prices surged after the European Union agreed to slash oil imports from Russia by the end of this year, dealers said.
On Monday, European Union leaders agreed in principle to cut 90% of oil imports from Russia by the end of this year, resolving a deadlock with Hungary over the bloc’s toughest sanction yet on Moscow since the invasion of Ukraine three months ago, according to reports.
At 0928 IST, the July contract of Brent crude oil on the Intercontinental Exchange was at $122.88 a bbl, against the previous close of $121.67 a bbl. It was at $119.43 on Friday.
A fall in domestic equity indices also dampened sentiment for the Indian currency, dealers said. At 0928 IST, the Nifty 50 and the Sensex were down 0.7% and 0.8%, respectively.
“It is going to be all about crude today. The dry spell of volumes should finally end,” a dealer with a state-owned bank said. “The 77.70-77.75 (a dollar) level will remain in focus.”
Dealers have now pegged immediate key technical support for the rupee at 77.70 a dollar.
For the rest of the day, the Indian unit is seen at 77.4000-77.8000 a dollar. (Pratiksha)
India Rupee: Expected range for rupee – May 31
NEW DELHI – Following are the expected support and resistance levels for the rupee, as forecasted by leading banks and brokerages in an Informist poll:
(Pratiksha and Richard Fargose)
End
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Michael Correya
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