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Informist, Monday, Jul 15, 2024

By Sourabh Kumar

MUMBAI – The rupee ended the day near a one-month low against the dollar after banks persistently purchased the greenback on behalf of importers, dealers said. "It was just importers the whole day, because now they know that 50 (83.50 to a dollar) is good resistance," a dealer with a state-owned bank said.

On Friday, the Reserve Bank of India bought dollars to keep the rupee from rising past 83.50 to a dollar. Due to that intervention, most importers today rushed to purchase dollars thinking the rupee may depreciate further going ahead, which weighed on the Indian unit, dealers said.

After moving in a slightly broader range of 9 paise, the rupee settled at 83.5925 a dollar. On Friday, the Indian unit closed at 83.5350 a dollar. In the morning, it opened steady despite the weaker dollar index. This was due to some demand for the greenback from importers, dealers said.

The dollar index remained weak even as the Producer Price Index in the US rose 0.2% in June, more than the expectations of a 0.1% rise in a poll by Reuters. The dollar index fell after softer-than-expected inflation data from the US on Thursday, dealers said. The index, which measures the strength of the greenback against a basket of six major currencies, was at 104.08 at 1559 IST, after closing at 104.08 on Friday and 104.50 on Thursday.

While the dollar index provided positive cues for the rupee, the presence of the RBI did not allow the Indian unit to strengthen against the greenback, dealers said. Apart from this, importers, including oil marketing companies, bought the greenback today because of the shortened trading week. The market will be closed on Wednesday for Muharram.

Oil prices moved slightly higher as traders remained wary of the volatile situation in West Asia, where some friction appeared to have developed in the ceasefire talks between Israel and Hamas, according to media reports. At 1600 IST, the September Brent Crude contract on the Intercontinental Exchange was at $85.11 per bbl, compared with $85.03 per bbl on Friday and $85.40 on Thursday.

The level at which the rupee closed also had some dealers thinking the Indian unit may finally transition to a new range against the greenback. "I think we may now see most of the movement above 50 (83.50 a dollar) and below 60 level (83.60 a dollar)," a dealer with a private bank said.

A few dealers also speculated that the RBI was active in the market today, managing both the rise and the fall in the Indian currency. While for the better part of the day, the rupee was trading at around 83.57 a dollar, it came under pressure in the final hour from large dollar purchases on behalf of importers, dealers said.

While the rupee ended lower, dealers do not expect it to go further down against the greenback as it is already near its record low. It was on Jun 20 that the Indian currency hit a lifetime low of 83.67 a dollar. "I think 83.62 a dollar will be a good resistance, both from their (central bank) perspective, and also as exporters are likely to come in at those levels," a dealer with a state-owned bank said.

FORWARDS

Premiums on the one-year dollar/rupee forward contract ended slightly higher due to a fall in US Treasury yields, dealers said. Some traders' dollar sales for forward delivery restricted the rise in premiums, they said. 

Apart from some profit-taking, traders were largely absent from the forward market as there was little motivation for them to hedge due to the lack of significant movement in the Indian currency in the spot market, dealers said.

The 10-year benchmark US Treasury yield ended at its lowest level in four months on Friday as investors did not pay much heed to the slightly higher-than-expected Producer Price Index data.

Forward premiums rose earlier today, noting a fall in US Treasury yields as well as higher-than-expected headline inflation in India, dealers said. India's CPI inflation rose to a four-month high of 5.08% on year in June from 4.80% in May, according to the data released by the National Statistics Office on Friday. This indicated that the RBI may not cut rates anytime soon, thus leading to an expectation that the interest rate differential will stay higher for a longer period, they said.

At 1530 IST, the premium on the one-year, exact-period dollar/rupee forward contract was 141.86 paise, as compared to 141.24 paise on Friday. On an annualised basis, the premium was 1.70%, against Friday's close of 1.70%.

OUTLOOK

On Tuesday, the rupee will track the movement of the dollar index and crude oil prices, dealers said. They will continue to keep an eye out for any potential risks to crude oil prices from geopolitical tensions in West Asia. 

The RBI might sell the greenback to save the Indian unit from touching a record low, dealers said. They said a few exporters are also likely to sell dollars, noting higher dollar/rupee levels.

During the day, the rupee is seen at 83.40-83.60 a dollar, with key technical support pegged at 83.60 a dollar.

India Rupee: Steady amid lack of firm cues; market unsure of rupee move

MUMBAI – The rupee was steady against the dollar as market participants refrained from placing large bets amidst a lack of firm cues, and due to an uncertainty about the movement in the dollar/rupee pair going ahead, dealers said.

"Activity is a bit muted, but we do see some importers buying at these levels as well, while some are waiting," a dealer with a state-owned bank said. After the rupee failed to rise past 83.50 a dollar on Friday due to persistent dollar buys by the Reserve Bank of India, some importers were buying the greenback since (Monday) morning, they said.

However, others hoped the rupee would rise, as they expect foreign fund inflows into domestic equities, the gilt market, and intermittently for initial public offerings would ultimately support the Indian currency, dealers said.

Further, they speculated that the RBI was both buying and selling dollars to keep the rupee trading in a thin band. Moreover, they said a few state-owned banks might also be buying the greenback for reference rate fixing.

Dealers said a few oil marketing companies were also in the market demanding the greenback due to a holiday on Wednesday. They, however, said more of them are expected to come on Tuesday.

Crude oil prices were steady as traders cautiously watched the situation in West Asia, where Hamas denied earlier reports that it had withdrawn from truce talks with Israel. The September Brent crude contract on the Intercontinental Exchange was at $85.03 per bbl at 1412 IST, unchanged from Friday and slightly lower than $85.40 on Thursday.

Exporters were on the sidelines, as they waited for the rupee to reach near 83.60 a dollar, before placing large bets, dealers said.

In terms of fundamentals, the dollar index remained near the over one-month low of 104.04 that it hit on Friday. The index, which measures the strength of the greenback against a basket of six major currencies, was at 104.10 at 1412 IST, compared with 104.08 on Friday and 104.50 on Thursday.

The greenback had recovered slightly earlier today after a failed assassination attempt on former US president Donald Trump at a rally on Sunday. After the incident, the odds of Trump getting elected as the next US President in the Nov 5 elections increased. This gave a boost to the safe-haven demand for the US currency. 

For the rest of the day, the rupee is seen in a range of 83.40-83.60 against the dollar, dealers said. They peg immediate key technical support for the Indian currency at 83.60 a dollar.  (Sourabh Kumar)

India Rupee: Premiums steady; traders sell fwd dollars noting high levels

MUMBAI – Premiums on the one-year dollar/rupee forward contract were steady as some traders' dollar sales for forward delivery offset the effect of a fall in US Treasury yields, dealers said.

"We are seeing some receiving since morning, most probably profit booking," a dealer with a state-owned bank said. Forward premiums hit a near 3-month high of 1.71% earlier today, before falling slightly due to traders' sales of the greenback for forward delivery, dealers said.

Apart from some profit-booking, traders were largely absent from the forward market as there was less motive for them to hedge in the forward market due to lack of significant movement in the Indian currency in the spot market, dealers said.

Forward premiums rose earlier today, noting a fall in US Treasury yields as well as higher-than-expected headline inflation in India, dealers said.

India's CPI inflation rose to a four-month high of 5.08% on year in June from 4.80% in May, according to the data released by the National Statistics Office. This indicated that the Reserve Bank of India may not cut rates anytime soon, thus leading to the interest rate differential staying higher for longer, they said.

Also, a fall in US Treasury yields led to a rise in premiums, dealers said. The benchmark 10-year US Treasury yield ended at its lowest levels in four months on Friday as investors did not pay much heed to the slightly higher-than-expected producer price index data, which was released on Friday. The US producer price index in June rose 0.2%, more than the expectation of 0.1%. 

Despite a slightly higher-than-expected producer price index, market participants were largely firm on their view that the US Federal Reserve will cut rates in September.

Premiums on forwards of a currency pair are reflective of the interest rate differential between the two countries. At 1341 IST, the premium on the one-year, exact-period dollar/rupee forward contract was 141.23 paise, as compared to 141.24 paise on Friday. On an annualised basis, the premium was 1.69%, the same as Friday's close.  (Sourabh Kumar)

India Rupee: Technical Levels for rupee - Jul 15

NEW DELHI – At 0900 IST, the rupee was at 83.5300 a dollar, against 83.5350 at the previous close. At 1034 IST, the rupee was at 83.5400 per dollar.

Following are key support and resistance levels for the rupee as provided by leading banks and brokerages:

(Pratiksha)

India Rupee: Steady as importers' dollar demand offsets weak dollar index

MUMBAI – The rupee was steady against the dollar as dollar demand from some banks on behalf of importers offset the upward push from a broadly weak dollar index, dealers said.

"Slight importer pressure is there after they (Reserve Bank of India) bought heavily on Friday at 50 level (83.50 a dollar)," a dealer with a state-owned bank said.

After the Reserve Bank of India's likely intervention through dollar purchases around 83.50 a dollar on Friday, importers purchased the greenback today on the view that the Indian currency may not rise above 83.50 a dollar going ahead, dealers said.

While the dollar index recovered slightly in early trade, it was still near the over one-month low of 104.04 hit on Friday. The index recovered slightly after a failed assassination attempt on former US president Donald Trump led to safe haven demand for the US currency. After the incident, the odds of Trump being elected the new president of the US increased. The US election is due on Nov 5.

The dollar index, which measures the strength of the greenback against a basket of six major currencies, was 104.22 at 0954 IST, compared with 104.08 on Friday and 104.50 on Thursday.

Dealers expect the RBI to continue buying the greenback at around 83.50 a dollar, and prevent sharp appreciation in the Indian unit, dealers said. 

Meanwhile, a slight rise in crude oil prices is expected to weigh on the Indian currency, dealers said. Oil prices were up after reports suggested some friction in achieving a ceasefire deal between Hamas and Israel. At 0930 IST, the September Brent crude contract on the Intercontinental Exchange was at $85.19 per bbl, compared with $85.03 per bbl on Friday and $85.40 on Thursday.

For the rest of the day, the rupee is seen in a range of 83.40-83.60 against the dollar, dealers said. They peg immediate key technical support for the Indian currency at 83.60 a dollar.  (Sourabh Kumar)

India Rupee - Asia FX: Most down as dollar index recovers slightly

MUMBAI – Most Asian currencies fell against the dollar as the dollar index recovered slightly from the over one-month low it hit on Friday. The index gained some ground after an assassination attempt on former US president and the Republican candidate for the upcoming US presidential elections, Donald Trump, on Sunday spurred safe-haven demand for the greenback. The assassination attempt led to increased expectations among investors that Trump may emerge victorious in November's US elections.

Data released on Friday showed that the US producer price index rose 0.2% in June, more than expectations of 0.1% in a poll by Reuters. The producer price index rose 2.6% last month on a yearly basis, after an increase of 2.4% the month erlier. However, the data had little effect on investors' expectations that the Federal Reserve may start cutting interest rates in September.

The dollar index had hit an over-month low after data released on Thursday showed US inflation fell more than expected in June, increasing expectations of a rate cut in the US soon. The dollar index, which measures the strength of the greenback against a basket of six major currencies, was 104.21 at 0938 IST, compared with 104.08 on Friday and 104.50 on Thursday. It hit an over one-month low of 104.04 on Friday.

The South Korean won was the worst hit, falling 0.5% against the dollar. The Indonesian rupiah was down 0.2% ahead of Bank Indonesia's rate decision on Wednesday, where it is expected to maintain the benchmark rate at 6.25%. However, it is expected to cut the rate by 25 bps in the next quarter.

The Thai baht fell 0.3% against the greenback, also due to a fall in the Thailand SET index. The Philippines peso was down 0.3% against the dollar, while the Malaysian ringgit was steady against the greenback.  (Sourabh Kumar)

India Rupee: Expected range for rupee - Jul 15

MUMBAI – Following are the expected support and resistance levels for the rupee today, as forecast by leading banks and brokerages in an Informist poll:

(Sourabh Kumar)

End

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Rajeev Pai

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