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Informist, Tuesday, Aug 27, 2024

By Sourabh Kumar

MUMBAI – The rupee ended the day steady against the dollar as banks purchased the greenback on behalf of importers, to meet their payment obligations, which offset the impact of a broadly weak dollar index, dealers said. "There was not much movement today, because only need-based trade happened," a dealer with a state-owned bank said.

After moving in a 4-paise range, the rupee closed at 83.9250 a dollar. On Monday, the Indian currency settled at 83.9000 a dollar. Traders did not place large bets today due to uncertainty around the movement in the dollar/rupee from current levels, dealers said. They said both the exporters and importers traded to cover their daily needs.

The rupee opened steady today, after a rise in crude oil prices offset the upward push received from a relatively weaker dollar index, dealers said.

Crude oil prices rose on Monday, and in early trade today, on supply concerns amid geopolitical tensions in West Asia. Prices were on a rise after Israel, in a pre-emptive strike, hit multiple Hezbollah launch sites in the southern part of Lebanon with around 100 jets, according to several media reports.

Further, the closure of oilfields in eastern Libya, as reported by Reuters, also supported crude prices. The oilfields, which were closed, accounted for almost the whole of the country's oil supplies.

While towards the end of the trading day, crude oil prices inched slightly lower, oil marketing companies' purchase of the dollars put pressure on the Indian currency, dealers said. Oil companies were buying dollars on the fear that crude prices may rise going forward.

At 1530 IST, the October Brent crude contract on the Intercontinental Exchange was at $80.71 per barrel, after touching a high of $81.59 a bbl. On Monday, crude prices were at $81.43 a bbl. On Friday, it was $79.02 a bbl. As India is a major importer of crude oil, higher prices increase the import bill of the country, exerting pressure on the domestic currency.

Apart from oil marketing companies, demand for dollars by importers, who bought the greenback for meeting their daily requirements, also weighed on the rupee, dealers said.

On the supporting side, a relatively weaker dollar index provided cushion to the rupee, dealers said. The dollar index recovered from over a 13-month low it hit on Monday, however, remained broadly lower. "Even if the dollar index recovered, I think since it is still below 101.0, it is not a threat to the rupee," a dealer with a state-owned bank said.

The dollar index fell to over a 13-month low of 100.53 on Monday, after US Federal Reserve Chair Jerome Powell's speech on Friday hinted at a rate cut at the upcoming meeting of the Federal Open Market Committee in September. Powell said the time had come for policy to be adjusted. As of today, the odds of a 50-basis-point rate cut by the Fed in September are 28.5%, with a 71.5% chance of a 25-bps cut.

The dollar index, which measures the strength of the greenback against a basket of six major currencies, was 100.79 at 1530 IST, compared with 100.86 on Monday and 100.68 on Friday.

A few exporters also sold the greenback for their daily needs, which supported the rupee, dealers said. However, most of them waited for the rupee to fall below 84.00 a dollar, before placing large bets.

Market participants are waiting for the release of weekly US unemployment data, due Thursday, to further gauge the health of the US labour sector. "I think if jobless claims come higher, we may see some downward movement in the dollar/rupee, probably again to 75-80 levels (83.75-84.80 a dollar) before coming back to the current levels," the dealer with state-owned bank said.

FORWARDS

The premium on the one-year dollar/rupee forward contract ended down, as banks sold the greenback for forward delivery, taking advantage of a relatively higher forward premium, dealers said.

Banks purchased dollars for forward delivery as the premium on the one-year dollar/rupee forward contract was near the over 15-month-high hit on Monday. On an annualised basis, the one-year dollar/rupee forward premiums rose to over a 15-month-high of 2.14% on Monday.

The one-year dollar/rupee forward premium is expected to stay near 2.10%, as the US Federal Open Market Committee is expected by market participants to cut rates at its next meeting in September, they said.

With increasing chances of a rate cut by the Fed, and a likely 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, pushing forward premiums higher.

At 1530 IST, the premium on the one-year exact-period dollar/rupee contract was 176.51 paise, compared with 178.39 paise on Monday. On an annualised basis, the premium was 2.10%, against Monday's close of 2.13%.

OUTLOOK

On Wednesday, the rupee will take cues from the movement of the dollar index and crude oil prices. Dealers expect importers to purchase the greenback for their daily requirement.

Traders will continue to monitor the evolving situation in West Asia and its impact on crude oil prices. Oil marketing companies are expected to continue purchasing the greenback, putting downward pressure on the rupee, dealers said.

Some bank's dollar sales for foreign fund inflows on account of currently open initial public offerings may support the rupee, dealers said. The initial public offering for Premier Energies Ltd opened today, and will close on Thursday.

The RBI is expected to intervene to control the rupee's sharp movement on either side. During the day, the rupee is seen in a range of 83.80-84.00 a dollar, with strong technical support pegged at 84.00.

India Rupee - World FX: Dlr index off 13-mo low; US econ data weighs

MUMBAI – The dollar index recovered from a 13-month low today as geopolitical tensions in West Asia increased, prompting demand for safe assets. However, the recovery was limited by a fall in US durable goods orders data. The durable goods orders, excluding defence and aircraft, fell 0.8% in July. However, the overall orders data rose 9.9% in July, compared with 6.9% in June. 

The dollar index, which measures the strength of the greenback against a basket of six major currencies, was 100.77 at 1502 IST, compared with 100.86 on Monday and 100.68 on Friday. 

Meanwhile, San Francisco Fed President Mary Daly, on Monday said that "the time is upon us" to begin the interest rate cut and hinted at the likelihood of cutting rates by a quarter percentage. The odds of a 50-basis-point rate cut are 28.5%, while the odds of a 25-basis-point are 71.5%, according to CME FedWatch tool. 

The Japanese yen slipped 0.3% against the dollar. Japan's Finance Minister Shunichi Suzuki noted that the current geopolitical risks and market sentiment are making it difficult to forecast currency movements. He also mentioned that the market needs to closely observe how the US Federal Reserve monetary policy in September will affect other currencies, a report said.

The euro was up 0.1% against the dollar, despite the largest economy in Europe falling back into contraction. Germany's GDP for Apr-Jun, which was released today, showed that the economy shrank 0.1% in the quarter, compared with 0.2% in the quarter leading to March. The private consumption dropped by 0.2% in the quarter and government consumption rose by 1% on a quarterly basis. Moreover, net exports also showed a slump and investments fell more than 2%.

The Canadian dollar gained 0.1% against the greenback as oil prices surged amid growing geopolitical tensions in West Asia. Oil prices began rising Monday as tensions between Israel and Hamas escalated, and Libya's recent political instability today will likely impact the global oil supply chain. 

The political turmoil in Libya prompted authorities to halt oil exports. Eastern Libya fell into domestic political turmoil after tensions developed over the leadership of the central bank and the administration declared that all production in the country would be closed and exports halted.

The Australian dollar and pound sterling strengthened against the dollar by 0.1%. Bucking the trend, the Swiss franc was down 0.1%. (Gowri Lakshmi)

India Rupee: Remains tad down on bks' dlr buys for oil cos, importers

MUMBAI – The rupee remained slightly lower against the dollar as banks purchased the greenback for some oil marketing companies, dealers said. Banks also bought dollars for some importers, who were covering for their month-end payment obligations, they said.

"No major buying or selling is there today, just some demand from oilers," a dealer with a state-owned bank said.

Dealers said oil companies bought the greenback on fear that oil prices would rise further. Crude oil prices rose due to supply concerns amid geopolitical tensions in West Asia. As crude oil is a major importing commodity for India, higher prices increase the import bill of the country, exerting pressure on the domestic currency.

At 0925 IST, the October Brent crude contract on the Intercontinental Exchange was at $81.24 per barrel, compared with $81.43 per bbl on Monday, after opening at $79.35 per bbl. On Friday, the price was $79.02.

Some banks also sold the greenback for foreign fund inflows related to currently open initial public offerings, which limited losses for the rupee, dealers said. The initial public offering for Premier Energies Ltd opened today, and will close on Thursday.

A broadly weaker dollar index supported the rupee, dealers said. The index, which measures the strength of the greenback against a basket of six major currencies, was 100.86 at 1312 IST, compared with 100.86 on Monday and 100.68 on Friday.

Market participants now await the release of weekly unemployment data from the US, due Thursday, to gauge the health of the world's largest economy. For the rest of the day, the rupee is seen at 83.80-84.00 against the dollar, dealers said. They peg key technical support for the Indian currency at 84.00 a dollar. (Sourabh Kumar)

India Rupee: Premiums down as bks sell fwd dollars at higher levels

MUMBAI – The premium on the one-year dollar/rupee forward contract was down today, as banks sold the greenback for forward delivery, taking advantage of a relatively higher forward premium, dealers said.

"Today, we are not expecting much activity and movement, but some receiving (forward dollar sales) is there," a dealer with a state-owned bank said.

Banks purchased dollars for forward delivery as the premium on the one-year dollar/rupee forward contract was near the over 15-month-high hit on Monday. On an annualised basis, the one-year dollar/rupee forward premiums rose to a 15-month-high of 2.14% on Monday.

While inching slightly lower today, dealers expect premiums to stay relatively higher in upcoming weeks. The one-year dollar/rupee forward premium is expected to stay near 2.10%, as the US Federal Open Market Committee is likely to cut rates at its next meeting in September, they said.

Expectations of a rate cut by the US FOMC got a boost after Fed chair Jerome Powell on Friday said the time had come for policy to be adjusted. Market participants now wait for US unemployment claims data on Thursday to assess the chances of a 50-bps rate cut. As of today, the odds of a 50-bps rate cut by the Fed in September were 28.5%, with a 71.5% chance of a 25-bps cut.

With increasing chances of a rate cut by the Fed, and likely delay in cutting rates by the RBI, as expected by market participants, the interest rate differential between the two countries is expected to widen, pushing forward premiums higher. Premiums on a currency pair's forwards reflect the interest rate differential between the two countries.

At 1221 IST, the premium on the one-year exact-period dollar/rupee contract was 176.51 paise compared with 178.39 paise on Monday. On an annualised basis, the premium was 2.10%, down from Monday's close of 2.13%. (Sourabh Kumar)

India Rupee: Technical Levels for rupee - Aug 27

MUMBAI – At 0900 IST, the rupee was at 83.9200 a dollar, against 83.8900 from the previous close. At 1010 IST, the rupee was at 83.9300 per dollar. The following are key support and resistance levels for the rupee as provided by leading banks and brokerages:

(Gowri Lakshmi)

India Rupee: Tad down as oil cos buy dlrs fearing rise in oil prices

MUMBAI – The rupee was slightly lower against the dollar as banks purchased the greenback on behalf of oil marketing companies, dealers said. Oil companies bought dollars fearing a further rise in crude oil prices, they said.

"Demand (for dollars) from oilers has been seen since opening, but we expect the levels to be capped at 96 (83.96 a dollar)," a dealer with a foreign bank said.

Oil marketing companies stepped up their dollar purchases, fearing a further rise in crude oil prices. Oil prices rose due to supply concerns amid geopolitical tensions in West Asia. Further, oilfields in eastern Libya, which account for the bulk of the country's oil production and exports, will be closed, according to a report by Reuters. This heightened supply concerns and drove prices higher.

At 0925 IST, the October Brent crude contract on the Intercontinental Exchange was at $81.24 per barrel, compared with $81.43 per bbl on Monday, after opening at $79.35 per bbl. On Friday, the price was $79.02. As crude oil is a major importing commodity for India, higher prices increase the import bill of the country, exerting pressure on the domestic currency.

The dollar index recovered from an over 13-month low hit on Monday. "But it is still below 101 levels, and now we are waiting for (US) unemployment claims data," a dealer with a state-owned bank said. Market participants await the release of the weekly unemployment data from the US on Thursday.

The dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 100.89 at 0931 IST. On Friday, the index had touched a high of 101.55, before closing at 100.68.

Dealers said some foreign fund inflows on account of the initial public offerings currently open, especially of Premier Energies, limited losses for the rupee. The IPO for Premier Energies opened today, and will close on Thursday.

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

India Rupee - Asia FX: Most down as dlr index recovers from 13-mo low

MUMBAI – Most Asian currencies fell against the dollar as the dollar index recovered from over a 13-month low it hit on Monday as geopolitical instability in West Asia drove demand for safe haven assets.

However, the recovery was limited after data showed that new orders for key US manufactured capital goods fell in July. This data is a closely watched proxy for spending plans by businesses.

The non-defence capital goods orders fell 0.1% on month in July, after June's data was revised lower to show a rise of 0.5% from the previously reported figure of a 0.9% increase.

The Taiwan dollar fell 0.2% against the dollar as the local manufacturing sector's business sentiment fell in July. The Taiwan Institute of Economic Research's composite index, which measures business sentiment among local manufacturers, fell 0.06 points on month to 99.00 in July.

The Indonesian rupiah and the Philippines peso fell 0.6% and 0.4%, respectively, against the greenback. The Malaysian ringgit and the South Korean won were each down 0.2% against the greenback. The Thai baht was down 0.1% against the US unit.  (Sourabh Kumar)

India Rupee : Expected range for rupee - Aug 27

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 Manisha Baxla

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