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Informist, Wednesday, Aug 28, 2024

By Sourabh Kumar

MUMBAI – The rupee ended the day steady against the dollar after some banks sold dollars likely on behalf of the Reserve Bank of India to offset the downward pressure from oil marketing companies' constant dollar purchases, dealers said.

"As the pressure built on the rupee, the central bank was there to protect it," a dealer with a state-owned bank said. "The rupee will continue to be under pressure this week on month-end payment needs from importers."

After touching over a two-week low of 83.9675 a dollar during the day, the rupee settled at 83.9525 a dollar. On Tuesday, the rupee closed at 83.9250 a dollar.

After opening steady, the rupee came under pressure from dollar purchases by importers, including oil marketing companies, who demanded the greenback for their month-end payment obligations, dealers said.

While oil prices fell, an increase in the demand by oil marketing companies weighed on the rupee, dealers said. Crude prices were down on demand concerns from a slowdown in major economies around the world. Data released on Tuesday showed that Germany's economy shrank by 0.1% on quarter in Apr-Jun. In Jan-Mar, the economy expanded by 0.2%. 

At 1530 IST, the October Brent crude contract on the Intercontinental Exchange was at $78.81 per barrel, compared with Tuesday's close of $79.55 a bbl. On Monday it closed at $81.43 a bbl.

Apart from importers' dollar demand, a recovery in the dollar index from over a 13-month low also weighed on the Indian currency, dealers said. The index, which measures the strength of the greenback against a basket of six major currencies, was 100.89 at 1530 IST, compared with 100.55 on Tuesday, and 100.86 on Monday. It had hit a fresh over 13-month low of 100.51 on Tuesday.

The dollar index fell on Tuesday after data released on the same day showed that US house prices fell 0.1% on month in June. On a yearly basis, house prices rose the slowest in over a year. "I still feel that the dollar will remain weak," a dealer with a state-owned bank said. "We also have to see what kind of data points come on Thursday and Friday." The US weekly unemployment claims data is due on Thursday, which investors were waiting for. On Friday, the US personal consumption expenditure price index will be released. 

Market participants were waiting for the release of such data from the US to gauge the momentum in the economy, and assess the quantum of rate cuts in September. While there was certainty about the US Federal Open Market Committee cutting rates at its next meeting in September, the division of opinion still lies on the quantum of such a cut. According to the CME FedWatch tool, as of today, there were 65.5% chances of a 25 basis point rate cut at the meeting. Odds of a 50-basis-point rate cut were seen at 34.5%.

Coming back to the domestic market, with constant pressure on the rupee, the RBI had to intervene by selling dollars today. The central bank has been intervening in the market whenever the Indian unit comes under pressure and falls near 84.00 a dollar. Earlier this month, the RBI had asked several banks not to bid aggressively against the rupee, in a bid to prevent the rupee from hitting 84.00 a dollar.

A few banks sold dollars for foreign fund inflows into currently open initial public offerings which supported the rupee. The IPO of Premier Energies Ltd opened on Tuesday, and will close on Friday. The portion reserved for qualified institutional buyers was subscribed 1.4 times, with foreign institutional investors accounting for 72% of the total.

FORWARDS

The premium on the one-year dollar/rupee forward contract ended largely steady as market participants refrained from placing large bets ahead of the release of US unemployment data, dealers said. The data, they said, would help them further gauge the health of the world's largest economy.

US Treasury yields were steady on Tuesday ahead of the release of key US economic data, including the personal consumption expenditure price index on Friday. Premiums on a currency pair's forwards reflect the interest rate differential between the two countries.

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 178.70 paise, compared with 176.26 paise on Tuesday. On an annualised basis, the premium was 2.11%, against Tuesday's close of 2.10%.

OUTLOOK

On Thursday, the rupee will take cues from the movement of the dollar index and crude oil prices. Dealers expect importers to continue purchasing the greenback for their daily requirements.

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 RBI is expected to intervene by selling dollars to control the rupee's sharp fall. 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: Australian dlr up as CPI rises more than view

MUMBAI – The Australian dollar was up 0.1% against the US dollar as the country's consumer price index rose 3.5% annually in July, higher than market expectations of 3.4%. The minutes of the Reserve Bank of Australia's last meeting showed that the central bank had considered raising interest rates to control inflation.

The euro was down 0.5% against the dollar ahead of the Eurozone flash inflation numbers on Friday. The region's consumer inflation is seen rising 2.2% on year in August after rising 2.6% in July. The euro may weaken further if Eurozone inflation falls more than expected in August, as it would boost expectations of an interest rate cut by the European Central Bank.

The New Zealand dollar was down 0.1% as the dollar index was seen on a recovery track. The dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 100.95 at 1614 IST, after falling to a fresh 13-month low of 100.51 on Tuesday. The index was at 100.86 on Monday.

The Japanese yen was down 0.3% against the US currency as the dollar index recovered from an over 13-month low. The yen constitutes 13.6% in the dollar index. The fall of the Japanese currency was limited as Bank of Japan Deputy Governor Ryozo Himino said, "BoJ will adjust the degree of monetary accommodation if it has growing confidence that its outlook for economic activity and prices will be realised". According to a poll by Reuters, majority of economists expect the central bank to hike rates again this year, with most anticipating a rate hike in December.

Market participants are waiting for speeches by US Federal Reserve Board of Governors member Christopher Waller and Atlanta Fed President Raphael Bostic, both due later today. They are also waiting for the US weekly unemployment data, which is due Friday, to assess the likely quantum of rate cut by the Fed in September. The odds of a 50 basis point rate cut by the Fed in September are 36.5%, while the odds of a 25 bps rate cut are 63.5%, according to CME FedWatch tool.

The pound sterling was down 0.1% against the dollar ahead of Bank of England policymaker Catherine Mann's speech later today. The Canadian dollar and the Swiss franc were also down 0.1% each against the greenback.  (Gowri Lakshmi)

India Rupee: Tad down on oil cos' dlr buys; RBI dlr sales limit losses

MUMBAI – The rupee was slightly down against the dollar, coming under pressure from banks' constant purchase of the greenback on behalf of oil marketing companies, dealers said. They said the Reserve Bank of India sold the greenback, limiting losses on the Indian currency.

"The Central Bank is protecting 96-97 levels (83.96-83.97 a dollar), and they won't allow the figure to be hit," a dealer with a foreign bank said. "And there is constant demand from oil companies."

Dealers said importers, including oil marketing companies, have been purchasing the greenback since the start of this week to meet their month-end payment obligations. Under such pressure, the Indian currency touched over a two-week low of 83.9675 a dollar during the day.

The RBI intervened in the market by selling dollars to prevent the rupee from hitting 84.00 a dollar, dealers said. They said a few exporters also sold the greenback, which prevented the rupee from falling sharply.

A recovery in the dollar index, after touching a fresh over 13-month low on Tuesday, also weighed on the rupee, dealers said. It touched a high of 100.96 today. The index, which measures the strength of the greenback against a basket of six major currencies, was 100.82 at 1322 IST, compared with 100.55 on Tuesday and 100.86 on Monday. 

While crude oil prices were down, an increase in the purchase of the greenback by oil companies weighed on the rupee. Oil prices were down on demand concerns, after Germany's economy shrank in Apr-Jun on a quarterly basis. At 1322 IST, the October Brent crude contract on the Intercontinental Exchange was at $79.45 per barrel, compared with Tuesday's close of $79.55 a bbl. On Monday it closed at $81.43 a bbl.

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

India Rupee: Technical Levels for rupee - Aug 28

MUMBAI – At 0900 IST, the rupee was at 83.9350 a dollar, against 83.9250 from the previous close. At 1040 IST, the rupee was at 83.9475 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 Asian shrs fall post Australia CPI

MUMBAI – Most Asian currencies were lower in early trade today, dragged down by a fall in Asian equities. Asian equities were mostly lower after data released today showed that inflation in Australia rose more than expected. 

Australia's CPI rose 3.5% on year in July, more than the expectation of a 3.4% rise by economists in a Reuters poll. The minutes of the Reserve Bank of Australia's last meeting had showed that the central bank had considered raising rates to control inflation.

The dollar index fell to a fresh 13-month low of 100.51 on Tuesday, which supported Asian currencies. The dollar index fell after data showed that US house prices fell 0.1% on month in June. On an yearly basis, house prices rose the slowest in over a year. A fall in the dollar index supports the rupee. The index, which measures the strength of the greenback against a basket of six major currencies, was at 100.72 at 0954 IST, compared with 100.55 on Tuesday, and 100.86 on Monday.

Meanwhile, another report on Tuesday showed that consumer confidence in the world's largest economy rose to a six-month high of 103.3 this month from 101.9 in July. However, investors seemed to not have paid much attention to this data point.

Market participants now await the release of the US weekly unemployment data, due Thursday, and the personal consumption expenditures price index, due Friday, to assess the quantum of the rate cut in September by the US Federal Open Market Committee. According to the CME FedWatch tool, as of today, there is a 67.5% chance of a 25-basis-point rate cut at the Federal Open Market Committee's meeting in September. Odds of a 50-bps rate cut are seen at 32.5%.

The South Korean won was the worst hit and fell by 0.5% against the greenback, as KOSPI was down 0.5% in early trade. 

The Taiwan dollar was down 0.1% against the greenback as the state of the economy, measured by the National Development Council, fell in July, showing that the economy was cooler compared with June.

The Thai baht was down 0.2% against the dollar amidst a tussle between the country's central bank and the government over the central bank's policy.

The Philippines peso was steady against the dollar. The Indonesian rupiah was up 0.2% against the US unit as the Jakarta Composite Index was up 0.2% in early trade.  (Sourabh Kumar)

India Rupee: Steady as importers' dollar buys offset weak dlr index

MUMBAI – The rupee was steady against the dollar as banks purchased the greenback on behalf of importers which offset the upward push received from a weak dollar index, dealers said.

"Even if the dollar is lower, importers are buying for the past few days," a dealer with a state-owned bank said. Importers were purchasing dollars to meet their month-end payment obligations, dealers said. 

After falling on Friday, the dollar index has remained low as market participants gained confidence that the US Federal Reserve will cut rates in September. The index fell on Friday after Fed Chair Powell hinted at a rate cut. According to the CME FedWatch tool, as of today, there were 67.5% chances of a 25 basis point rate cut at the Federal Open Market Committee's meeting in September. Odds of a 50 bps rate cut were seen at 32.5%.

The dollar index slipped to a fresh over 13-month low of 100.51 on Tuesday, after data showed that US house prices fell in June. On a yearly basis, house prices rose the slowest in over a year.

The index, which measures the strength of the greenback against a basket of six major currencies, was 100.74 at 0922 IST, compared with 100.55 on Tuesday, and 100.86 on Monday.

Ease in crude oil prices supported the rupee, dealers said. Oil prices fell on demand concerns amid weaker economic data from the US, and most recently from Germany, where data showed that its economy shrank by 0.1% on quarter in Apr-Jun.

At 0922 IST, the October Brent crude contract on the Intercontinental Exchange was at $79.66 per barrel, compared with Tuesday's close of $79.55 a bbl. On Monday it closed at $81.43 a bbl.

Dealers said some foreign fund inflows for the initial public offering of Premier Energies Ltd may support the rupee. The IPO of Premier Energies opened on Tuesday, 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. Dealers peg key technical support for the Indian currency at 84.00 a dollar. (Sourabh Kumar)

India Rupee : Expected range for rupee - Aug 28

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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