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Informist, Thursday, Aug 8, 2024

By Kabir Sharma and Sourabh Kumar

MUMBAI – The rupee ended at a record closing low against the dollar today despite the Reserve Bank of India's dollar sales as some banks persistently bought the greenback for importers, dealers said. "They (RBI) were present around 97 (83.97) which did not let it fall to 84 (a dollar), but importers were applying pressure constantly," a dealer at a brokerage firm said.

After moving in a very narrow range of 4 paise today, the Indian currency ended at 83.9625 a dollar, against Wednesday's close of 83.9550 a dollar. The rupee had fallen to a lifetime low of 83.9725 a dollar on Wednesday. 

The Reserve Bank of India intervened by selling dollars to keep the rupee from falling to the psychologically crucial level of 84 a dollar, dealers said. The Indian unit was largely unaffected by the outcome of the Reserve Bank of India's Monetary Policy Committee meeting today, they said. 

The RBI's Monetary Policy Committee voted 4-2 to keep the policy repo rate unchanged at 6.50%. The committee also voted to maintain the policy stance of "withdrawal of accommodation".

The rupee opened steady, and a few importers, including some oil marketing companies, purchased the greenback for their daily requirements, dealers said. A rise in crude oil prices on Wednesday weighed on the Indian currency, dealers said. Crude futures inched up after a sharp fall in US crude stockpiles last week. Crude traders were also worried about the geopolitical situation in West Asia. 

The dollar index was slightly down for the better part of the day, supporting the Indian currency, dealers said. The index, which measures the strength of the greenback against a basket of six major currencies, fell to a low of 102.92 today compared with 103.19 on Wednesday.

Dealers said the majority of traders did not place large bets today as they waited for further direction on the dollar/rupee movement. After talks in the market that the RBI had asked some banks on Tuesday to avoid placing large bets against the rupee on the offshore non-deliverable forwards and domestic spot market, importers became hopeful that the rupee may rise from here, they said. "After that news, importers are thinking that the rupee may move higher till 83.84 a dollar, but I don't think that is possible right now," a dealer with a state-owned bank said. "Because, if you see, in terms of currency competitiveness, our currency should be around 83.50 a dollar right now." 

Exporters were on the sidelines today as they hoped for a fall in the rupee going ahead, dealers said. Though the central bank is expected to intervene in the market by way of dollar sales to prevent the rupee from falling sharply, exporters hope that the central bank will allow the rupee to depreciate, they said. "I think the rupee may fall below the figure (84.00 a dollar), and see 84.05 a dollar in the next week," a dealer with a private bank said.

FORWARDS

Premium on the one-year dollar/rupee forward contract ended slightly higher today on account of a fall in the benchmark US Treasury note, as market participants continued to assess the possibility of a 50-basis-point rate cut by the US Federal Reserve in September, dealers said. At 1707 IST, the yield on the benchmark US Treasury note was 3.93%, down from 3.96% at close on Wednesday.

Odds of the Fed cutting rates in September by 50 bps were about 66% today compared with just 22% a week ago, according to the CME FedWatch tool. Dealers said the US unemployment data, which is scheduled for release after market hours today, could provide further cues to the US interest rate trajectory.

With the Fed expected to cut rates in September, and no certainty around the timing of the RBI cutting rates yet, the interest rate differential between the US and India is expected to rise, keeping the dollar/rupee forward premiums higher.

At 1530 IST, the premium on the one-year exact-period dollar/rupee contract was 171.35 paise, compared to 169.06 paise on Wednesday. On an annualised basis, the premium was 2.06% compared to 2.00% on Wednesday.

OUTLOOK

On Friday, the rupee is expected to track the movement in the dollar index. It will also track any change in crude oil prices, dealers said. Any sharp fall in domestic equities may also weigh on the currency, they said. Today, both the BSE Sensex and the Nifty 50 settled 0.7% lower.

Market participants will also look forward to the release of the US unemployment data later today. The US jobless claims are expected to be at 240,000 in the week ended Saturday, after rising to 249,000 in the week before, according to a poll by Dow Jones. 

During the day, the rupee is seen at 83.80-84.10 a dollar, with strong technical support pegged at 84.00.

India Rupee - World FX:Dlr weakens as mkt cautious before labour data

MUMBAI – The dollar index weakened today ahead of the release of initial jobless claims data from the US. This is the same data point which triggered the turbulent period last week before the release of the US jobs reports, leading to a significant sell-off on Monday in various asset categories.

Initial claims for the week ended Aug 2 are expected to head to 240,000 from 249,000, according to FX Street. The index, which measures the strength of the greenback against a basket of six major currencies, was 103.12 at 1628 IST, compared with 103.19 on Wednesday, and 102.93 on Tuesday.

The Japanese yen was up 0.3% against the dollar as market participants recovered from the sudden fall in yen after comments from Bank of Japan Deputy Governor Shinichi Uchida, who on Wednesday said, "We won't raise rates when markets are unstable."

The euro was largely unchanged against the dollar. Finnish European Central Bank policymaker Olli Rehn in a speech on Wednesday said, "Inflation continues to slow down, but the path to the two percent target remains bumpy this year." Rehn added, "The rate cuts would help the eurozone economy recover, in particular the "fragile" industrial growth and subdued investments."

The Swiss franc was up 0.4% against the dollar, while the pound sterling was largely unchanged against the greenback. (Kabir Sharma) 

India Rupee: Premiums up as US ylds dn; mkts eye US unemployment data

MUMBAI – Premium on the one-year dollar/rupee forward contract rose today due to a slight fall in the benchmark US Treasury note, as market participants continued to assess the possibility of a 50-basis-point rate cut by the US Federal Reserve in September, dealers said.

"Forwards are up today as investors are anticipating a rate cut by the Fed, and then UST (US Treasury yields) have also come down slightly now," a dealer with state-owned banks said. After closing at 3.96% on Wednesday, the yield on the benchmark US Treasury note fell to 3.92% at 1438 IST.

Odds of the Fed cutting rates in September by 50 bps were about 73% today compared with just 11% a week ago, according to the CME FedWatch tool. Dealers said the US unemployment data, which is scheduled for release after market hours today, could provide further cues to the US interest rate trajectory. With the Fed expected to cut rates in September, and no likelihood of the RBI cutting rates yet, the interest rate differential between the US and India is expected to rise, and that was keeping the dollar/rupee forward premiums higher.

The US jobless claims are expected to be at 240,000 in the week ended Saturday, after rising to 249,000 in the week before, according to a poll by Dow Jones. 

Dealers said a few importers also purchased the greenback for forward delivery, which led to a rise in dollar/rupee one-year premiums. Importers bought dollars in the forward market, anticipating that the rupee may depreciate in the domestic spot market this week. "I think the rupee will cross figure (84.00 a dollar) in the next week, and some importers are taking bets in forwards, as they are thinking it (one-year dollar/rupee forward premiums) may rise further," a dealer with a private bank said.

At 1437 IST, premiums on the one-year exact-period dollar/rupee contract were 172.85, compared with 169.06 on Wednesday. On an annualised basis, the premiums were 2.06% compared with 2.0% on Wednesday.  (Sourabh Kumar)

India Rupee: Steady as RBI keeps repo rate, policy stance unchanged

MUMBAI – The rupee remained steady against the dollar as the Reserve Bank of India kept the repo rate unchanged at 6.50%, in line with expectations, with no change in its stance, dealers said.

"Since morning, the rupee has been range-bound, and there was nothing which was not expected from the speech (of RBI governor Shaktikanta Das)," a dealer with a private bank said.

The RBI's Monetary Policy Committee today voted with a 4-2 majority to keep the policy repo rate unchanged at 6.50%. The committee also decided to maintain its stance at "withdrawal of accommodation" to ensure inflation progressively aligns with its target, while supporting growth.

The dollar index eased slightly, which supported the Indian unit, dealers said. The index, which measures the strength of the greenback against a basket of six major currencies, was 103.04 at 1055 IST, compared with 103.19 on Wednesday, and 102.93 on Tuesday.

Dealers said a few exporters sold the greenback, noting the reluctance of the RBI in allowing the rupee to fall below 84.00 a dollar. They said the central bank may intervene in the market by selling dollars if the rupee falls towards 84.00 a dollar.

For the rest of the day, the rupee is seen in a range of 83.80-84.10 against the dollar, dealers said. They peg key technical support for the Indian currency at 84.00 a dollar. (Sourabh Kumar)

India Rupee: Technical Levels for rupee - Aug 8

MUMBAI – At 0900 IST, the rupee was at 83.9350 a dollar, against 83.9550 from the previous close. At 1045 IST, the rupee was at 83.9500 per dollar.

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

(Sourabh Kumar)

India Rupee: Largely steady on caution ahead of RBI policy outcome

MUMBAI – The rupee was largely steady against the dollar as traders exercised caution ahead of the outcome of the Reserve Bank of India's Monetary Policy Committee meeting at 1000 IST, dealers said. 

All 30 economists, treasurers, and fund managers polled by Informist expect the six-member Monetary Policy Committee to leave the repo rate unchanged at 6.50% for the ninth consecutive meeting today. A majority of the respondents also see the rate-setting panel continuing with the "withdrawal of accommodation" policy stance. 

"If the RBI’s policy aligns with expectations, the rupee may experience only minor fluctuations. However, any unexpected deviation, such as a shift to a neutral stance, moving towards a rate cut, could inject volatility and potentially exacerbate rupee depreciation," Amit Pabari, managing director, CR Forex, said in a note.

Apart from the repo rate and policy stance, market participants will closely watch out for RBI Governor Shaktikanta Das' commentary on liquidity management and the Indian currency.

A fall in domestic and Asian share indices weighed on the rupee, dealers said. At 0925 IST, both the Nifty 50 and Sensex were down 0.3% each. 

Dealers expect the RBI to intervene through dollar sales if the Indian unit inches closer to the psychologically-significant 84-per-dollar mark. "Only if the (RBI) governor gives out a very dovish tone do I see any further depreciation in the rupee. But even then, it is unlikely that 84 (a dollar) will break," a dealer at a big state-owned bank.

For the rest of the day, the rupee is seen in a range of 83.80-84.10 against the dollar, dealers said. They peg key technical support for the Indian currency at 84.00 a dollar. (Pratiksha)

India Rupee - Asia FX: Most up as dollar index down post BoJ summary

Informist, Thursday, Aug 8, 2024

MUMBAI – Most Asian currencies rose against the dollar today as the dollar index inched slightly down. The index, which measures the strength of the greenback against a basket of six major currencies, was 103.07 at 0915 IST, compared to 103.19 on Wednesday, and 102.93 on Tuesday. The dollar index came under slight pressure after Bank of Japan's summary, published today, showed that policymakers discussed the possibility of a further rate hike after raising rates to 0.25% on Jul 31 from 0-0.1% earlier.

The Thai baht was up 0.3% against the dollar as the country's inflation rose 0.8% in July, more than the previous month's 0.6% increase. It was also higher than the forecast of 0.7% in a Reuters poll. However, consumer prices remained below the central bank's target range of 1-3%.

The Indonesian rupiah and the Malaysian ringgit were up 0.7% and 0.8%, respectively, against the greenback. The Taiwan dollar was up 0.4% against the US unit.

The Philippines peso was steady against the US currency. A rise in the Philippines's GDP in Apr-Jun to 6.3% from the previous quarter's 5.8% growth supported the currency.

The South Korean won was down 0.1% against the dollar, tracking a fall in domestic equities. Losses were limited as Wednesday's data showed that the country's monthly rise in the current account surplus in June was the highest in over six years. The country reported a $12.26 bln current account surplus on a seasonally adjusted basis in June. Market participants now await weekly US unemployment report, due later today.  (Sourabh Kumar)

India Rupee: Expected range for rupee - Aug 8

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 Saji George Titus

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