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Informist, Friday, Aug 16, 2024

By Pratiksha

NEW DELHI – The rupee ended steady against the dollar today as the Reserve Bank of India's constant dollar sales intervention offset the impact of dollar purchases by importers, including oil marketing companies, dealers said. 

"It was the usual trading day. The tight range and RBI keeping the upside (of dollar/rupee) capped," a dealer at a private bank said. "There is not a lot of incentive for anybody to trade in this range." 

After moving barely in a range of 4 paise throughout the day, the Indian currency settled at 83.9400 a dollar, as against 83.9475 a dollar on Wednesday. Indian financial markets were closed on Thursday due to Independence Day.

The Indian currency started the day steady at 83.9400 a dollar, as improved risk appetite among investors offset the impact of a strong dollar index, dealers said. Investors' risk sentiment was better after Thursday's robust US economic data eased concerns of a recession in the US economy. 

Data released on Thursday showed that US retail sales rose more than expected in July, increasing 1.0% after a downwardly revised 0.2% drop in June. Economists polled by Reuters had forecast retail sales advancing 0.3%. Another report on Thursday showed a smaller-than-expected increase in the number of US citizens filing for unemployment benefits. The initial claims for state unemployment benefits in the US dropped 7,000 to a seasonally adjusted 227,000 for the week ended Aug 10. Economists polled by Reuters had forecast 235,000 claims for the week.

The dollar index rebounded from an over one-week low on Wednesday after robust economic data eased fears of a recession in the US and dashed expectations of aggressive interest rate cuts. 

Shortly after opening, the Indian currency came under pressure as some banks purchased the greenback on behalf of oil and other importers, dealers said. They said importers purchased the greenback on fears that the local unit may depreciate in the coming days. "There is not as much demand (for dollars) as there was before, but there is an expectation that 84 will be broken," a dealer at a private bank said. 

Some foreign banks also bought the greenback for foreign fund outflows, which also weighed on the Indian unit, dealers said. However, as soon as the local currency moved to the day's low of 83.9650 a dollar, state-owned banks stepped in to sell dollars on behalf of the RBI. The central bank continued with its dollar sales intervention, likely to keep the rupee from falling below the psychologically crucial level of 84 to a dollar, dealers said.

"The 83.97 level has seen constant offers from them (RBI). But 84 should be touched if not today, then tomorrow. It's a matter of time," said a dealer at another private bank.

Some dealers pointed out that the narrow range that the central bank has kept the rupee in so far this month has led to a lack of active trading in the market and, consequently, lacklustre volumes. Exporters have been absent from the market and are expected to let go of their dollar holdings only when the rupee sustainably falls below 84.00 a dollar, they said. 

The dollar index eased slightly during European trade, which also supported the Indian unit, dealers said. At 1530 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 102.80, compared with 103.04 on Thursday, and 102.57 on Wednesday. The index fell to an over one-week low of 102.27 on Wednesday. 

A surge in domestic equities also supported the Indian unit, they said. Today, both the Nifty 50 and the Sensex ended 1.7% higher each. 

FORWARDS

Premium on the one-year dollar/rupee forward contract ended lower today, tracking a rise in US Treasury yields, dealers said. US Treasury yields rose after stronger-than-expected US retail sales data allayed fears of recession in the US, and indicated an imminent soft landing of its economy.

However, some banks bought the greenback for forward delivery, noting relatively lower levels, which limited the fall in premiums, dealers said. 

"The pay on dip (in forward premium levels) sentiment is there in the market," said a dealer at a foreign bank. "With the rate cut picture in the US becoming clearer, premiums should consolidate around these levels."

Currently, the odds of the US central bank slashing interest rates by 50 basis points at its September policy meeting are at 27.5%. The odds of a 25-bps rate cut in September are at 72.5%, as per the CME FedWatch Tool.

Premiums on forwards of a currency pair are reflective of the interest rate differential between the two countries. With increasing chances of a rate cut by the US Federal Reserve, and a potential delay in cutting rates by the Reserve Bank of India, as expected by market participants, the interest rate differential between the two countries is expected to widen, thus keeping the forward premiums higher.

At 1530 IST, the premium on the one-year exact-period dollar/rupee contract was 173.76 paise, compared with 176.93 paise on Wednesday. On an annualised basis, the premium was 2.07%, compared with 2.10% on Wednesday.

OUTLOOK

On Monday, the rupee will track movement in the dollar index and crude oil prices, dealers said. The RBI may intervene through dollar sales in the offshore non-deliverable forwards market if the rupee inches closer to 84.00 per dollar ahead of the opening of the domestic spot market at 0900 IST, dealers said.

Traders will continue to monitor the evolving situation in West Asia and its subsequent impact on crude oil prices. The RBI is also expected to continue intervening through dollar sales in the domestic spot market to prevent a sharp fall in the rupee. 

Dealers expect importers to continue buying dollars at every dip in the dollar/rupee level, which may keep the Indian unit under pressure. During the day, the rupee is seen at 83.85-84.00 a dollar, with strong technical support pegged at 84.00.

India Rupee:World FX- Australian dlr up 0.3% post robust jobs data

MUMBAI – The Australian dollar rose 0.3% against the greenback after higher than expected July jobs data, released on Thursday, pointed towards a resilient labour market. The Australian Bureau of Statistics showed net employment rose 58,200 in July from 52,200 in June. This was well above market forecasts for a 20,000 rise, reports said. However, the economy marked a 4.2% unemployment rate in July from 4.1% in June, recording the highest unemployment rate since January 2022. 

The pound sterling rose by 0.2% against the dollar after data released today showed retail sales in the UK increased by 0.5% month-on-month in July, recovering from a 0.9% decline in June. However, the data was lower than expected estimates of a 0.7% rise by the Wall Street Journal poll.

The dollar index eased slightly during European trade. The index had recovered from an over one-week low on Thursday after robust economic data eased fears of a recession risk in the US and dampened expectations of aggressive interest-rate cuts. 

The US retail sales rose more than expected in July, increasing 1.0% last month after a downwardly revised 0.2% drop in June. Economists polled by Reuters had forecast retail sales advancing 0.3%. Another report on Thursday showed a smaller-than-expected increase in the number of US citizens filing for unemployment benefits. Initial claims for state unemployment benefits in the US dropped 7,000 to a seasonally adjusted 227,000 for the week ended Aug 10, data showed. Economists polled by Reuters had forecast 235,000 claims for the latest week.

Following the data, the odds of the US central bank slashing interest rates by 50 basis points at its September policy meeting fell to 27.5% compared with 42% before the data. Odds of a 25-bps rate cut in September now have a 72.5% probability, as per the CME FedWatch Tool.

At 1540 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 102.81 compared with 103.04 on Thursday, and 102.57 on Wednesday. The index fell to an over one-week low of 102.27 on Wednesday. (Gowri Lakshmi) 

India Rupee: Premiums dn as US yields rise post stronger econ data

MUMBAI – Premium on the one-year dollar/rupee forward contract fell today, tracking a rise in US Treasury yields, dealers said. Some economic data from the US showed the underlying strength in the economy, with inflation gradually easing.

"It is due to retail sales data that forwards (one-year dollar/rupee) have come down," a dealer with a state-owned bank said. Retail sales in the US rose 1% on month, significantly higher than the expectation of a 0.3% rise in a Reuters poll. It was also in contrast to June's figure of a 0.2% fall in retail sales.

Further, initial claims for state unemployment benefits fell 7,000 to a seasonally-adjusted 227,000 for the week ended Saturday. This was less than the 235,000 claims that economists had forecast in a Reuters poll. The latest data suggested a resilient labour market.

Stronger-than-expected data boosted investors' confidence in the US economy, with the odds of a 50-basis-point rate cut by the Fed in September decreasing to about 28% as of today from 55% a week ago, with a 74% chance of a 25-bps rate cut, according to CME FedWatch tool. 

Investors were still hopeful of at least a 25-bps rate cut as the latest US CPI report showed that inflation in the US eased as expected. The latest consumer prices data for July showed that inflation in the US was easing gradually, paving the way for at least a 25-basis-point rate cut by the US Federal Reserve in September. US CPI rose 0.2% on month in July, as widely expected. On a yearly basis, CPI rose 2.9% last month, which was the smallest gain since 2021. 

With increasing chances of a rate cut by the Fed, and a potential delay in cutting rates by the Reserve Bank of India, as expected by market participants, the interest rate differential between the two countries is expected to widen, thus keeping the forward premiums higher.

"I think (one-year dollar/rupee) forwards will move in the range of 2.04-2.10%, as I think India will cut rates only after December, with the Fed expected to cut in September," a dealer with another state-owned bank said.

Dealers said some banks bought the greenback for forward delivery today, noting a relatively lower one-year dollar/rupee forward premium. Volumes were lower than usual today, they said. 

At 1417 IST, the premium on the one-year exact-period dollar/rupee contract was 173.26 paise, compared with 177.93 paise on Wednesday. On an annualised basis, the premium was 2.06%, compared with 2.10% on Wednesday. The market was closed on Thursday for Independence Day.  (Sourabh Kumar)

India Rupee: In narrow band; RBI's dlr sales keep rupee above 84/$1

NEW DELHI – The rupee traded in a narrow range against the dollar as state-owned banks' dollar sales, likely on behalf of the Reserve Bank of India, offset the impact of banks' dollar purchases on behalf of oil and other importers, dealers said. 

The central bank continued with its dollar sales intervention, likely to keep the rupee from falling below the psychologically-crucial level of 84-per-dollar, dealers said. Since last week, the RBI has been actively selling dollars around 83.96-83.97 a dollar. "The tight range (of rupee) continues. We are stuck in the same range. They (RBI) are selling (dollars) at 83.96," a dealer at a private bank said.

On the other hand, state-owned banks purchased dollars on behalf of oil and other importers in expectation of a depreciation in the Indian unit going ahead, dealers said. "The thing is the rupee is not reacting to any of the positive cues and nobody expects it (rupee) to appreciate in the coming days," a dealer at a state-owned bank said. "Naturally, there is good buying interest around these levels." 

Even as the RBI has been actively selling dollars to support the rupee, most dealers expect the rupee to eventually fall below the crucial support of 84-per-dollar in the coming days. 

A sharp rise in domestic equities also gave some support to the Indian unit, dealers said. At 1340 IST, both the Nifty 50 and Sensex were up 1.3% each. 

For the rest of the day, the rupee is seen at 83.85-84.00 against the dollar, dealers said. They peg key technical support for the Indian currency at 84.00 a dollar.  (Pratiksha)

India Rupee: Technical Levels for rupee - Aug 16

MUMBAI – At 0900 IST, the rupee was at 83.9400 a dollar, against 83.9475 from the previous close. At 1140 IST, the rupee was at 83.9550 per dollar. The following are key support and resistance levels for the rupee as provided by leading banks and brokerages:

(Gowri Lakshmi)

India Rupee - Asia FX: Most dn as dlr index recovers post US data

MUMBAI – Most Asian currencies fell against the dollar, which was steady in early trade today after recovering on Thursday from an over one-week low it hit on Wednesday. The dollar index recovered as US retail sales surpassed expectations. 

The dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 102.95 at 0936 IST, compared with 103.04 on Thursday, and 102.57 on Wednesday. The index fell to an over one-week low of 102.27 on Wednesday. 

US retail sales in July rose 1% on month, significantly higher than the expectation of a 0.3% rise in a Reuters poll. It was also in contrast to June's figure of a 0.2% fall in retail sales.

Investor confidence in the world's largest economy got a boost from lower-than-expected weekly jobless claims. Initial claims for state unemployment benefits fell 7,000 to a seasonally-adjusted 227,000 for the week ended Saturday. This was less than the 235,000 claims that economists had forecast in a Reuters poll. It suggested a resilient labour market.

The latest consumer prices data for July showed that inflation in the US was easing gradually, paving the way for at least a 25-basi-point rate cut by the US Federal Reserve in September. The US consumer price index rose 0.2% on month in July, as widely expected. On a yearly basis, CPI rose 2.9% last month, which was the smallest gain since 2021. 

Odds of a 50 bps rate cut by the Fed in September decreased to 30% as of today from 55% a week ago, with a 74% chance of a 25 bps rate cut, according to CME FedWatch tool. 

The Philippines peso was down 0.5% against the dollar after the country's central bank cut its benchmark overnight borrowing rate by 25 bps to 6.25%. It was the first cut in about four years, with the aim of keeping the economy growing. In Jan-Mar, private consumption in the country grew at the slowest pace after the pandemic, according to reports. 

The Bangko Sentral ng Pilipinas Governor Eli Remolona said there may be more rate cuts this year. "We may need further moves in the same direction," he said.

The Indonesian rupiah fell 0.2% against the greenback, as Indonesia's foreign debt rose 2.7% on year to $408.6 bln in Apr-Jun. The Taiwan dollar was also down 0.1% against the greenback. The Thai baht fell 0.1% against the US currency.

Bucking the trend, the South Korean won was up 0.5% against the dollar, mainly due to a 1.8% rise in the Korea Composite Stock Price Index today. The index rose on improved risk appetite amongst investors after higher-than-expected US retail sales data for July.

The Malaysian ringgit was steady against the US unit as the country's higher-than-forecast growth offset the downward pressure from a recovery in the dollar index. Malaysia's economy grew 5.9% in Apr-Jun, more than 5.8% rise projected by a Reuters poll.  (Sourabh Kumar)

India Rupee: Steady as improved risk appetite offsets strong dlr index

NEW DELHI – The rupee was largely steady against the dollar today as improved risk appetite among investors offset the impact of a broadly strong dollar index, dealers said. Risk sentiment improved after Thursday's robust US economic data allayed concerns of a recession in the US economy. 

US retail sales rose more than expected in July, increasing 1.0% last month after a downwardly revised 0.2% drop in June. Economists polled by Reuters had forecast retail sales advancing 0.3%. Another report on Thursday showed a smaller-than-expected increase in the number of US citizens filing for unemployment benefits. Initial claims for state unemployment benefits in the US dropped 7,000 to a seasonally adjusted 227,000 for the week ended Aug 10, data showed. Economists polled by Reuters had forecast 235,000 claims for the latest week.

The dollar index fell to an over one-week low on Wednesday after the US consumer price index showed inflation in the world's largest economy is cooling, cementing expectations that the Federal Reserve will start cutting rates in September. However, the dollar index recovered on Thursday and was around the same levels in early trade today, after robust economic data released on Thursday dashed expectations of aggressive interest rate cuts. 

"The rupee has not moved due to the rate cut view of 50 bps (in the US) changing. The dollar index is also around the same levels. The recession fear going away should help, but not much," said a dealer at a state-owned bank. "The as usual range (for the rupee) will continue now that all the data is out of the way."

Following the Thursday data, the odds of the US central bank slashing interest rates by 50 basis points at its September policy meeting fell to 27.5% compared with 42% before the data. Odds of a 25-bps rate cut in September are now seen as having a 72.5% probability, as per the CME FedWatch Tool.

At 0945 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 102.96, compared with 103.04 on Thursday, and 102.57 on Wednesday. The index fell to an over one-week low of 102.27 on Wednesday. 

Domestic equities rose sharply today, tracking global markets, as fears of a recession in the US eased. This supported the Indian unit, dealers said. At 0940 IST, both the Nifty 50 and Sensex were up 1% each. 

"As the August effect fades away with crucial data showing a mixed picture, the rupee is expected to trade within a range of 83.80 to 84.05 against the dollar in the short term, with a bias towards the lower end of the range," Amit Pabari, managing director, CR Forex, said in a note. 

Dealers expect the Reserve Bank of India to intervene through dollar sales if the rupee moves closer to the psychologically-crucial level of 84 a dollar. 

For the rest of the day, the rupee is seen at 83.85-84.00 against the dollar, dealers said. They peg key technical support for the Indian currency at 84.00 a dollar.  (Pratiksha)

India Rupee: Expected range for rupee - Aug 16

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

(Gowri Lakshmi)

End

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

Edited by Saji George Titus

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