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Informist, Thursday, Jul 25, 2024

By Sourabh Kumar

MUMBAI – The rupee closed steady against the dollar, thanks to the intervention by the Reserve Bank of India, as their dollar sales offset the dollar purchases by importers, dealers said. "It was all central bank today," a dealer with a state-owned bank said. "When the rupee went about 65 levels (83.65 a dollar), some importers came in."

After moving in a range of 7 paise, the rupee ended at 83.6975 a dollar. On Wednesday, the Indian currency settled at 83.7175 a dollar. Soon after a steady opening, the RBI sold the greenback to prevent a fall in the Indian currency, dealers said. 

Some importers purchased the greenback, thereby, putting pressure on the rupee on a day when volumes were already less, dealers said. Importers bought dollars to meet their month-end payments, they said. 

A few dealers also speculated that the Reserve Bank of India might have been active on both sides, that is purchasing as well as selling dollars today, to keep the rupee range-bound. 

They said the Indian currency is now largely expected to move between 83.60 and 83.70 a dollar, from its earlier range of 83.45-83.60 a dollar. "The range has shifted now in line with what the RBI has been doing for the past couple of months," a dealer with a private bank said.

At about 1330 IST, the rupee started moving slightly higher, after the offshore Chinese yuan rose against the dollar. At the same time, a fall in the dollar index supported the rupee. As the rupee touched today's high of 83.6600, importers bought the greenback, which weighed on the rupee.

The dollar index fell due to a strengthening Japanese yen. The Japanese currency strengthened 1% ahead of the Bank of Japan's policy meeting outcome on Jul 31, where market participants expect it to raise rates. Currently, the benchmark interest rate in Japan is 0.0-0.1%. 

Losses in the dollar index were limited as business activity in the US, measured by the S&P Global Flash US Composite PMI, edged higher to 55.0 this month from the previous month's 54.8. This month's figure is the highest since April 2022. A reading above 50 shows the sector is expanding. 

The dollar index, which measures the strength in the greenback against a basket of six major currencies, was at 104.28 at 0809 IST, compared with Wednesday's close of 104.33 and Tuesday's close of 104.47.

PREMIUMS

Premiums on the one-year dollar/rupee forward contract rose to over a five-month high of 1.80% today, as importers purchased the greenback for forward delivery on fears that the Indian currency may fall in the spot market, dealers said. 

"Some importers might have come in today, because now, if the rupee breaks 83.74 a dollar, then the figure (84.00 a dollar) is not far," a dealer with a private bank said.

Some dealers said they were puzzled when paying was seen at current levels, and said some banks are expected to sell the greenback in the forward market, taking advantage of higher forward levels.

Premiums also remained higher as market participants cemented their expectations of a rate cut by the US Federal Reserve at its September meeting, dealers said. Odds of a rate cut by the US Federal Reserve at its September meeting were 100%, according to the CME FedWatch tool.

If the Fed cuts interest rates in September and the Reserve Bank of India keeps rates unchanged, the interest rate differential will increase, the expectation of which is leading to a rise in premiums. 

At 1530 IST, the premium on the one-year, exact-period dollar/rupee forward contract was 149.73 paise, compared with 148.73 paise on Wednesday. On an annualised basis, the premium was 1.79%, against Wednesday's close of 1.77%.

OUTLOOK

On Friday, market participants will take cues from the movement of the dollar index and crude oil prices, dealers said. Market participants expect the RBI to continue intervening in the market through dollar sales to prevent runaway depreciation in the Indian unit.

Market participants await the release of the US personal consumption expenditure data, due Friday. The key US inflation figure is expected to rise 0.1% on a monthly basis, according to a Reuters poll.

Market participants also await the release of the US Apr-Jun advance GDP estimates later today, dealers said. Most exporters are likely to remain on the sidelines, on hope of a further fall in the rupee, dealers said. Importers are expected to indulge in panic-buying if the rupee falls sharply, they said. During the day, the rupee is seen at 83.55-83.75 a dollar, with key technical support pegged at 83.70 a dollar.

India Rupee - World FX: Yen rally continues on BoJ rate hike view

MUMBAI – The Japanese yen surged 1.0% against the US dollar today on heightened expectations of a rate hike at the outcome of the Bank of Japan's policy meet, due on Wednesday. The current rate stands at 0.0-0.1%. A report released by the government of Japan today capped gains for the yen. While the report maintained its assessment of the Japanese economy, it drew a bleaker picture of its exports on account of slowing demand from China. 

The euro rose 0.1% against the US dollar. While a drop in Germany's business environment weighed on the euro, a broader weakness in the dollar index due to a surging yen supported it. The Ifo institute's business climate index in Germany fell to 87.0 in July from 88.6 in June.

The pound sterling fell 0.2% against the greenback as expectations grew that the Bank of England may cut rates by 25 basis points to 5.00% at its next meeting on Aug 1. In a Reuters poll, over 80% of economists expect the central bank to cut the bank rate.

The Australian dollar was down 0.8% against the dollar, dragged by a fall in its equities market. Moreover, commodities prices also weighed on the Australian currency. A bleak outlook of the Chinese economy weighed on commodity prices.

The Canadian dollar fell 0.2% against the US currency as the Bank of Canada cut its key interest rate by 25 bps for the second straight month to 4.5%.

The dollar index fell ahead of the release after pressure from a rising Japanese yen. The dollar index, which measures the strength in the greenback against a basket of six major currencies, was at 104.18 at 1523 IST, compared with Wednesday's close of 104.33 and Tuesday's close of 104.47.

Market participants await the release of the US Apr-Jun advance GDP estimates later today, dealers said. They would also keep an eye on the US personal consumption expenditure data, due to come out on Friday. The key inflation figure is expected to rise 0.1% on a monthly basis, a Reuters poll showed.  (Sourabh Kumar)

India Rupee: Steady; importers' dlr buys offset rise in Chinese yuan

MUMBAI – The rupee was steady as dollar purchases by importers offset the support received from a rising offshore Chinese yuan, dealers said. Volumes in the market were low today, as market participants refrained from placing large bets ahead of the release of US Apr-Jun GDP advance estimates later today, and US personal consumption expenditure data on Friday.

"See, the Chinese yuan rose now, and then the dollar index is also down, so we are seeing some of that effect on the rupee," a dealer with a brokerage firm said.

A few importers' dollar purchases also weighed on the rupee, dealers said. However, the Reserve Bank of India's dollar sales at 83.71 a dollar prevented the rupee from falling. Importers bought dollars only when the rupee touched 83.6600 a dollar, the day's high so far, dealers said.

The dollar index fell, which supported the rupee, dealers said. The index fell after the greenback came under pressure from a rising Japanese yen. The yen rose 1.2% today so far. The Japanese currency rose ahead of the Bank of Japan's policy meeting outcome on Wednesday, where investors expect the central bank to raise its benchmark rates.

For the rest of the day, the rupee is seen in a range of 83.55-83.75 against the dollar, dealers said. They peg immediate key technical support for the Indian currency at 83.75 a dollar.  (Sourabh Kumar)

 India Rupee - Asia FX:Most dn; South Korean won dn 0.5% post GDP data

MUMBAI – Most Asian currencies were down against the dollar, with the South Korean won the worst hit, due to a sharp fall in domestic equities.

Asian share indices fell sharply, tracking their US peers, as investors digested the weak quarterly earnings from companies in the world's largest economy. At 1030 IST, South Korea's Kospi was down 1.5%, Philippine's PSEi was 1.1% lower, and Indonesia's Jakarta Composite had edged 0.5% lower. 

However, a fall in the dollar index limited losses for the Asian units. The dollar index fell due to gains in the Japanese yen. The Japanese currency rose about 1% against the dollar ahead of the Bank of Japan's policy meeting outcome on Wednesday, where investors expect the central bank to raise its benchmark rates. The dollar index, which measures the strength in the greenback against a basket of six major currencies, was at 104.22 at 0956 IST, compared with Wednesday's close of 104.33 and Tuesday's close of 104.47.

The South Korean won fell 0.5% after data showed that the country's economy shrank by 0.2% on quarter in Apr-Jun. It was also weaker than the 0.1% forecast by economists in a Reuters poll. The economy shrank after growing 1.3% in the quarter before. 

The Indonesian rupiah was down 0.4% against the dollar after the IDX Composite market index was down 0.5% at 1030 IST. The Thai baht and the Philippines peso were both down 0.2% each against the greenback.

Bucking the trend, the Malaysian ringgit was up 0.1% against the greenback as the country's Investment, trade, and investment minister, Tengku Datuk Sei Aziz, said economic reforms made by the government were driving foreign investors to their domestic stock market.

Early today, the People's Bank of China cut its one-year policy rate by 20 basis points to 2.3%, the second surprise from China's central bank this week after it cut short-term lending rates on Monday. Despite cutting rates, the Chinese currency fell against the greenback.  (Sourabh Kumar)

India Rupee:Steady; RBI's likely dlr sales offset importers' dlr buys

MUMBAI – The rupee was steady as the Reserve Bank of India's likely intervention by way of dollar sales in the spot market offset the downward pressure from importers' dollar purchases, dealers said. They said the central bank might have sold the greenback to prevent the local unit from hitting a record low. The rupee hit a lifetime low of 83.7200 a dollar on Wednesday. 

"Definitely, RBI is there at 71, and they were in NDF too," a dealer with a state-owned bank said. "That is why it was a steady opening, otherwise it would have opened lower," a dealer with a foreign bank said. The RBI also likely sold dollars aggressively in the offshore non-deliverable forwards market to prevent the rupee from hitting a record low at the open, dealers said. 

Dollar purchases by importers of gold and other commodities exerted pressure on the rupee, dealers said. Gold importers demanded substantial amounts of dollars to meet their month-end payment requirements, which continued to put pressure on the rupee, they said. A fall in domestic equities also weighed on the rupee. At 0933 IST, the Nifty 50 and the Sensex were down 0.6% each.

Dealers expect the RBI to continue intervening in the spot market by way of dollar sales to prevent runaway depreciation in the rupee. While dollar sales by a few exporters also supported the rupee, most of them were waiting for higher dollar/rupee levels before placing large bets, dealers said. 

The dollar index was down, which provided some support to the rupee, according to dealers. The dollar index was weighed down by strength in the Japanese yen. The Japanese currency rose 1% against the dollar ahead of the Bank of Japan's policy meeting outcome on Wednesday, where investors expect the central bank to raise its benchmark rates. 

The dollar index, which measures the strength in the greenback against a basket of six major currencies, was at 104.22 at 0956 IST, compared with Wednesday's close of 104.33 and Tuesday's close of 104.47.

Market participants await US Apr-Jun advance GDP estimates later today, and US personal consumption expenditure data on Friday. The key US inflation figure is expected to rise 0.1% on a monthly basis, according to a Reuters poll.

For the rest of the day, the rupee is seen in a range of 83.55-83.75 against the dollar, dealers said. They peg immediate key technical support for the Indian currency at 83.75 a dollar.  (Sourabh Kumar)

India Rupee: Expected range for rupee - Jul 25

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 Akul Nishant Akhoury

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