Informist, Tuesday, Dec 13, 2022
By Ananya Chaudhuri
NEW DELHI – The rupee ended at an over one-month low against the US dollar as banks persistently bought the greenback on behalf of importers, dealers said.
Today, the Indian currency settled 0.3% down at 82.8050 a dollar compared to 82.5300 a dollar on Monday.
The Indian unit started the day lower against the greenback at 82.6400 a dollar after data showed India’s industrial production fell to a 26-month low in October.
India’s IIP contracted 4.0% on year in October compared with 3.5% growth in September, sharply below the Informist poll estimate of a growth of 0.3% on year in October.
An overnight 2% rise in crude oil prices also weighed on the Indian unit.
Crude prices rose due to supply concern as a key Canada-US pipeline remained shut and Russian President Vladimir Putin threatened to cut down oil production.
At 1633 IST, the February contract of Brent crude oil on the Intercontinental Exchange was at $79.22 a bbl against $77.99 on Monday. On Friday, the contract settled at $76.10 a bbl.
Further, a firm dollar kept the Indian currency under pressure. The dollar index remained firm as market awaits the US Consumer Price Index data due to be released later today.
Analysts expect November core inflation to be steady at 0.3% on month, but see a moderation in the annual pace, with headline prices seen rising 7.3% as against 7.7% last year.
At 1633 IST, the dollar index, which measures the strength in the greenback against a basket of six major currencies, was at 105.02 compared with 105.13 on Monday. It was at 104.81 on Friday.
In early trade, the rupee rose to the day’s high of 82.6000 a dollar as some banks stepped in to sell dollars on behalf exporters, and likely for foreign fund inflows.
“There were likely inflows for corporates due to which the rupee appreciated to 82.60 (a dollar) level before,” a dealer from a state-owned bank said.
Some banks bought dollars on behalf of oil companies and importers which weighed on the local unit, dealers said
Moreover, a border tension between India and China put also pressure on the Indian currency, dealers said.
Indian and Chinese troops clashed near the Line of Actual Control in Tawang sector of Arunachal Pradesh on Friday. The face-off resulted in minor injuries to a few personnel from both sides, according to reports
The rupee traded in a tight range of 82.60-82.75 for a majority of the trade. At the last hour of trade, the rupee breached the immediate technical support level of 82.75 a dollar as traders covered their short dollar bets ahead of the US CPI for November later today and took long dollar position which weighed on the Indian currency.
“Since the day’s low (technical support level) was breached, heavy buying came from traders as they started to went long on dollar. It was positional only,” a dealer from a state-owned bank said.
FORWARDS
Premiums on dollar/rupee forwards ended lower today as banks sold the greenback for forward delivery on the view that the differential between Indian and US yields may narrow after the sharp fall in India CPI inflation, dealers said.
India’s annual inflation rate based on CPI fell to an 11-month low of 5.88% in November from 6.77% in October, the first month in 2022 when the retail inflation rate has fallen below the upper end of the RBI’s tolerance band of 2-6%.
After the sharp fall in headline inflation, some economists now expect the RBI to deliver repo rate hike of a small quantum or a pause in February, dealers said.
Premiums on forwards of a currency pair are reflective of the interest rate differential between the two countries. A slower-than-expected rise in India’s interest rates compared to the US would ensure the spread rates narrow further in the coming weeks, dealers said.
Premium on the one-year, exact-period dollar/rupee forward contract was at 155.50 paise as against 157.37 paise on Monday. On an annualised basis, the premium was at 1.88% against the previous close of 1.91%.
OUTLOOK
On Wednesday, the rupee will take cues from overnight movement in the dollar index after the release of US CPI data.
“Mostly, traders will be watchful of US CPI data later today and tomorrow’s FOMC (Federal Reserve Open Market Committee),” a dealer from a state-owned bank said.
Traders are largely expecting the US Fed to raise rates by 50 basis points. They’re also eyeing the European Central Bank, and Bank of England’s policy meeting due later this week.
The rupee is likely to be supported by inflows for YES Bank stake sale worth $1.1 bln, which is expected to be completed this week.
Dealers see immediate technical support for the Indian currency at 82.90 a dollar and resistance at 82.50 a dollar.
During the day, the rupee is seen at 82.50-83.00 a dollar.
India Rupee – World FX: Dollar tad down; US CPI, FOMC outcome eyed
MUMBAI – The dollar index eased slightly as investors await the US consumer price index for November later today, which is anticipated to show a slowdown in core inflation.
The market expects the US November core inflation print to be steady at 0.3% on month, but see a moderation in the annual pace, with headline prices seen rising 7.3% as against 7.7% a year ago.
Investors also remain cautious ahead of key monetary policy decisions by the Federal Reserve, the Bank of England, and the European Central Bank this week. The outcome of the Federal Open Market Committee’s meeting, due on Thursday, takes centre stage, with markets pricing in a 50-basis-point rate hike.
While the Fed has signalled it will hike rates at a slower pace in 2023, officials have cautioned that stubborn inflation will invite more rate hikes, which could see borrowing costs peak at higher-than-expected levels.
At 1511 IST, the dollar index, which measures the strength in the greenback against a basket of six major currencies, was at 105.01 compared with 105.13 on Monday. It was at 104.81 on Friday.
The Japanese yen rose slightly against the greenback as the market awaits trade data from Japan this week, which is expected to highlight continued pressure on the economy from a weak currency. Hoever, some stability in commodity markets is expected to help ease surging imports. (Aiswarya Santhosh)
India Rupee: Remains in narrow range on caution ahead of US CPI data
MUMBAI – The rupee stayed in a narrow range against the greenback as traders remained cautious ahead of the release of the US Consumer Price Index data, which is due later today, dealers said.
Analysts expect November core inflation to be steady at 0.3% on month, but see a moderation in the annual pace, with headline prices seen rising 7.3% as against 7.7% last year.
Meanwhile, tensions at the India-China border exerted pressure on the Indian unit, dealers said.
Indian and Chinese troops clashed near the Line of Actual Control in Tawang sector of Arunachal Pradesh on Friday. The face-off resulted in minor injuries to a few personnel from both sides, according to reports.
“The skirmish at the border is pulling the rupee down and supporting the dollar due to the rupee being risky at the moment,” a dealer with a big state-owned bank said.
Moreover, some banks bought dollars on behalf of oil companies and importers, and this further weighed on the rupee, dealers said.
On the other hand, likely dollar sales by banks on behalf of exporters limited the losses for the Indian currency, dealers said.
The rupee has moved in a range of 13 paise so far today.
The immediate technical resistance for the rupee is pegged at 82.50 a dollar and support at 82.80 a dollar, dealers said.
It is seen in the range of 82.40-82.80 for the rest of the day, dealers said. (Kabir Sharma)
India Rupee: Falls on weak Oct IIP data; US CPI, FOMC outcome eyed
NEW DELHI – The rupee fell sharply against the greenback today after data showed that India’s Index of Industrial Production index fell to a 26-month low in October, dealers said.
India’s Industrial Production contracted 4.0% on year in October compared with 3.5% growth in September, sharply below the Informist poll estimate of a growth of 0.3% on year in October.
Market participants await US Consumer Price Index data, which is due to be released later today. Analysts expect November core inflation to be steady at 0.3% on month, but see a moderation in the annual pace, with headline prices seen rising 7.3% against 7.7% last year.
Traders also exercised caution ahead of outcome of the US Federal Open Market Committee’s meeting, due on Thursday. Investors widely expect the US Federal Reserve to raise rates by 50 basis points.
At 1002 IST, the dollar index, which measures the strength in the greenback against a basket of six major currencies, was at 104.99 compared with 105.13 on Monday. It was at 104.81 on Friday.
However, likely dollar sales by banks on behalf of exporters may support the local unit, dealers said.
“Exporters are expected to sell (dollars) around as these are attractive (dollar/rupee) levels for them,” a dealer from a state-owned bank said. “The dollar index may remain firm ahead of the FOMC decision.”
The immediate technical resistance for the rupee is pegged at 82.50 a dollar and long-term resistance at 82.20 a dollar, dealers said.
The rupee is seen in the range of 82.40-82.80 for the rest of the day, dealers said. (Ananya Chaudhuri)
India Rupee: Expected range for rupee – Dec 13
MUMBAI – Following are the expected support and resistance levels for the rupee today, as forecasted by leading banks and brokerages in an Informist poll:
(Aiswarya Santhosh)
End
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Maheswaran Parameswaran
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