Informist, Friday, Dec 16, 2022
By Aiswarya Santhosh
MUMBAI – After trading in a thin range of 14 paise throughout the day, the rupee ended lower against the dollar due to broad-based strength in the dollar index and persistent purchases of the greenback for oil marketing companies and importers, dealers said.
The rupee ended at 82.8700 a dollar today as against 82.7600 a dollar on Thursday. The Indian unit fell to a low of 82.8950 a dollar during the day, but losses in the currency remained limited as state-owned banks sold dollars on behalf of exporters and likely the Reserve Bank of India, dealers said.
The rupee opened the day 9 paise lower as the greenback strengthened globally amid growing concern that continued monetary policy tightening by the world’s major central banks could lead to a recession, dealers said.
On Thursday, both the Bank of England and the European Central Bank hiked key interest rates by 50 basis points.
“This is not a pivot, this is not a slowdown, we are in for the long game,” ECB President Christine Lagarde said. “Compared with the Fed (US Federal Reserve), we have more ground to cover, we have longer to go.”
The Bank of England also indicated that more hikes were likely in the coming time.
A day earlier, the US Federal Reserve hiked its interest rates by 50 basis points and Chair Jerome Powell indicated that the central bank will deliver more interest rate hikes next year and that the recent signs of slowing inflation have not brought any confidence yet that the fight has been won.
Moreover, retail sales in the US fell 0.6% on month in November, raising fears that the Fed’s interest rate hikes are pushing the world’s largest economy into a recession. A Dow Jones poll of economists had estimated a 0.3% drop.
At 1745 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 104.50 compared with 104.56 on Thursday. It was 103.77 on Wednesday.
A fall in domestic equities also weighed on the Indian unit. Both the Nifty 50 and the Sensex ended 0.8% lower.
Foreign banks persistently purchased dollars on behalf of oil marketing companies and importers once the rupee touched the day’s high of 82.7550 a dollar, dealers said.
“There was ample buying (of dollars) in the market, thereby the rupee remained below the 82.77 level, but exporters were also there in the market,” said a dealer with a state owned bank.
Losses in the Indian unit were limited by persistent sale of dollars by state-owned banks on behalf of exporters and likely the Reserve Bank of India, dealers said.
“The RBI was possibly selling in the market around the 82.85 level,” said a dealer with a private bank.
Dealers said the central bank sold dollars to protect the Indian currency from falling below the psychologically-crucial level of 83.00 a dollar.
“As the rupee is holding the 82.85 level due to selling, importers will now wait for 82.65 level to buy (dollars),” a dealer with another state-owned bank said.
A fall in crude oil prices also limited losses in the Indian unit. Crude oil prices fell by 2% amid concerns that aggressive monetary policy tightening by central banks will lead to a global recession, weighing on the demand outlook for crude.
At 1745 IST, the February contract of Brent crude oil on the Intercontinental Exchange was at $79.76 a barrel against $81.21 on Thursday. It had settled $82.70 on Wednesday.
FORWARDS
Premiums on dollar/rupee forward contracts ended largely steady today. Earlier in the day, the dollar/rupee forward contracts fell to 1.97% as exporters sold dollars for forward delivery, noting a rise in the last two trading days, dealers said.
In last two trading days, premium on the one-year dollar/rupee contract has rebounded nearly 13 basis points.
The premium on the one-year dollar/rupee contract was 166.50 paise, against 166.92 paise on Thursday. On an annualised basis, the premium was at 2.01%, against the previous close of 2.02%.
OUTLOOK
The rupee is not traded on Saturday. On Monday, the Indian unit will take cues from overnight movement in the dollar index and Brent crude oil prices, dealers said.
“The rupee’s movement next week will be based on whether it will be able to hold the crucial 83.00 a dollar level,” a dealer with a state owned bank said. “If the 83 level breaks then 83.50 is the next crucial level,” the dealer said.
Dealers see immediate technical support for the Indian currency at 82.90 a dollar.
During the day, the rupee is seen at 82.60-83.10 a dollar.
India Rupee – World FX:Dollar index firm amid growing recession fear
NEW DELHI – The dollar remained firm against other major currencies amid growing fear that rate hikes by central banks of top economies may push the global economy into a recession.
Following the footsteps of the US Federal Reserve, the European Central Bank, and Bank of England raised their benchmark policy rates by 50 basis points on Thursday. Both the ECB and BoE said that more rate hikes are likely to continue in the coming time.
At 1516 IST, the dollar index, which measures the strength in the greenback against a basket of six major currencies, was at 104.69 compared with 104.56 on Thursday. It was 103.77 on Wednesday.
The pound sterling remained flat against the greenback even as retail sales in the UK fell by 0.4% in November against a Reuters’ poll projection of 0.3% on Friday
Japanese yen was down by 0.5% against the US dollar as market participants widely expect the Bank of Japan to maintain its ultra-loose policy in its meeting next week. (Ananya Chaudhuri)
India Rupee: In thin band; PSU banks’ dlr sales for RBI limit losses
NEW DELHI – The rupee remained in a thin range against the US unit as losses due to persistent dollar purchases by foreign banks on behalf of oil and other importers were restricted, dealers said. This was because of dollar sales, likely on behalf of the Reserve Bank of India, dealers said.
Dealers said some state-owned banks sold the greenback on behalf of the central bank at around 82.85-a-dollar mark to protect the Indian currency from falling beyond the psychologically-crucial level of 83.00.
“If it (rupee) breaks the 82.88 (a dollar) level now, we might see a quick move towards 83.00,” a dealer from a private bank said.
Foreign banks persistently bought the US currency around the 82.70 level on behalf of oil marketing companies and importers, which weighed on the rupee, dealers said.
The rupee has moved in a narrow range of 13 paise so far today.
Dealers have pegged immediate technical support for the rupee at 82.90 a dollar.
The rupee is seen trading in the 82.50-82-90 range for the rest of the day, dealers said. (Ananya Chaudhuri)
India Rupee:Down as dlr strengthens globally amid recession concerns
MUMBAI – The rupee fell against the dollar today as the dollar index rose sharply on Thursday due to fears of recession after continued monetary tightening by major central banks, dealers said.
Following in the footsteps of the US Federal Reserve, the European Central Bank and Bank of England on Thursday raised their interest rates by 50 bps each and suggested further rate hikes.
European Central Bank President Christine Lagarde stressed on further rate hikes as the central bank had much ground to cover.
A steeper-than-expected decline in US retail sales in November also aggravated concerns of a recession. Retail sales in the US fell 0.6% on month in November. A poll of economists by Dow Jones had estimated a 0.3% drop.
At 0958 IST, the dollar index, which measures the strength in the greenback against a basket of six major currencies, was at 104.32 compared with 104.56 on Thursday. It was 103.77 on Wednesday.
A fall in domestic share indices also weighed on the rupee. At 0958 IST, both the Nifty 50 and the Sensex were down 0.2%.
“Exporters should come around these levels but not in good numbers, since most of them have already covered,” a dealer with a state-owned bank said. “RBI action around 82.90 will be watched.”
Dealers have pegged immediate technical support for the rupee at 82.90 a dollar.
The rupee is seen trading in the 82.50-82-90 range for the rest of the day, dealers said. (Kabir Sharma and Pratiksha)
India Rupee – Asia FX:Most down as dlr index up amid recession fears
MUMBAI – Most Asian currencies were down against the dollar as the greenback strengthened on Thursday amid growing fears that continued interest rate hikes by major central banks could tip the world economy into a recession.
The Federal Reserve hiked the interest rates by 50 basis points last week. On Thursday, the Bank of England and European Central Bank followed suit, hiking their interest rates by half a percentage point each and indicating further rate hikes going ahead.
At 0959 IST, the dollar index, which measures the strength in the greenback against a basket of six major currencies, was at 104.35 compared with 104.56 on Thursday. It was 103.77 on Wednesday.
Unfavourable Chinese economic data also negatively impacted the Asian units. The country reported its November retail sales on Thursday, which plunged 5.9% on year. Industrial production rose 2.2% annually in November, which was less than the expected rise of 3.6% estimated in a Reuters poll.
Concerns over rising COVID-19 cases in China and worsening economic conditions also weighed on the Asian markets.
While the country has begun relaxing several COVID-related curbs, it is facing an unprecedented spike in infections. The government, in fact, said it is now impossible to track the spread of the virus in the country.
A fall in domestic equities also negatively impacted the local currencies. Equities fell around the world after disappointing US retail sales data for November aggravated concerns of an impending recession.
The Taiwan dollar was down by 0.4% against the greenback as the country’s benchmark Taiex index fell 1.16%. (Aiswarya Santhosh)
India Rupee: Expected range for rupee – Dec 16
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 Santosh)
End
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Aditya Sakorkar
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