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Informist, Tuesday, Sep 3, 2024

By Sourabh Kumar

MUMBAI – The rupee ended at a three-week low against the dollar today, as banks persistently purchased the greenback on behalf of oil marketing companies, dealers said. However, the Reserve bank of India's dollar sales prevented the rupee from falling further, they said.

"Pressure was there since the morning itself, from OMC (oil marketing companies), and then the central bank came around 96 (83.96 a dollar)," said a dealer with a private bank.

After moving in a range of 4 paise, the rupee closed at 83.9675 a dollar today. On Monday, the Indian currency had settled at 83.9175 a dollar. After opening steady, the Indian unit was under constant pressure from oil companies, which purchased the greenback, taking advantage of lower crude oil prices, dealers said.

Crude oil prices fell following reports of increasing supplies despite concern around demand. The Organization of the Petroleum Exporting Countries and its allies are scheduled to increase their oil output by 180,000 barrels per day in October, Reuters reported. This comes even as recent economic data from around the world suggest an easing global economy, painting a bleak picture of demand for crude oil. Data showed the manufacturing sector in the eurozone contracted in August.

At 1530 IST, the November Brent crude contract on the Intercontinental Exchange was at $76.24 per bbl, compared with Monday's close of $77.52 a bbl. On Friday, it closed at $78.80 a bbl.

A recovery in the dollar index from over a 13-month low hit last week also exerted pressure on the rupee, dealers said. The dollar index strengthened ahead of the release of multiple key economic data from the US, including on non-farm payrolls on Friday, for more cues on the likely size of the rate cut by the US Federal Reserve this month. 

Economists surveyed by Reuters expect the addition of 165,000 US jobs in August, up from an increase of 114,000 the previous month. As of today, odds of a 25-bps rate cut stood at 69%, with chances of a 50-bps cut seen at 31%. Before the jobs data, the US manufacturing purchasing managers' index is due later today.

At 1530 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 101.80 compared with 101.64 on Monday, and 101.73 on Friday.

With increasing pressure throughout the day driving the rupee lower, towards 84.00 a dollar, the Reserve Bank of India came to its rescue. The central bank sold dollars to prevent the rupee from hitting a record low. The Indian currency had hit a record low of 83.98 a dollar on Aug 12.

"They (central bank) sold around $1 bln today," a dealer with a state-owned bank said. "Their primary goal right now is to protect 84 level (84.00 a dollar)."

FORWARDS

The premium on the one-year dollar/rupee forward contract ended steady as market participants refrained from placing large bets ahead of the release of key economic data from the US in the remaining part of the week, dealers said. Market participants await the data to assess the quantum of a likely rate cut by the US Federal Open Market Committee this month. The odds of a 50-basis-point rate cut by the FOMC at its meeting starting Sep 17 are 31%, while the probability of a 25-bps cut is 69%, according to the CME FedWatch tool.

With the Fed likely to go for a rate cut this month, and no sight of a rate cut by the Reserve Bank of India yet, as viewed by the market, the interest rate differential between the US and India is likely to rise, driving dollar/rupee forward premiums higher. Premiums on forwards of a currency pair are reflective of the interest rate differential between the two countries. 

At 1530 IST, the premium on the one-year exact-period dollar/rupee contract was 179.22 paise, compared with 179.33 paise on Monday. On an annualised basis, the premium was 2.13%, against Monday's close of 2.14%.

OUTLOOK

On Wednesday, the rupee will take cues from the movement in the dollar index and crude oil prices, dealers said. Continuous dollar purchases by oil companies to stock up their oil reserves at lower crude prices are expected to weigh on the rupee, they said.

Market participants now await US manufacturing PMI data, due later today, for more cues on the quantum of a likely rate cut by the Fed. The ISM report on business manufacturing PMI for August is expected at 47.9, compared with 46.8 in July.

Dealers expect the Reserve Bank of India to continue to keep the Indian unit from falling beyond its psychologically-crucial level of 84-per-dollar through its dollar sales interventions. At the same time, they expect the central bank to intervene through dollar purchases if the rupee rises above 83.80 a dollar.  

During the day, the rupee is seen in a range of 83.80-84.00 a dollar, with strong technical support pegged at 83.98. 

India Rupee: Premiums steady before key US econ data; FOMC meet eyed

MUMBAI – Premium on the one-year dollar/rupee forward contract was steady ahead of the release of key economic data from the US in the remaining part of the week, dealers said. The US manufacturing purchasing managers' index will be released later today and the August non-farm payrolls data is scheduled for Friday.

"Not much movement and volume is also less because now people are just waiting for these data points (from the US)," a dealer with a private bank said.

Market participants refrained from placing large bets as they awaited the data to assess the quantum of the rate cut by the US Federal Open Market Committee this month. The odds of a 50 basis point rate cut by the FOMC at its meeting starting Sep 17 is 31% and the probability of a 25 bps cut is at 69%, according to the CME FedWatch tool.

"I think the maximum the premium (on the one-year dollar/rupee forward contract) can go is 2.20%, as we are expecting quite good receiving interest coming in at that level," the dealer said.

With the Fed likely to go for a rate cut this month, and no sight of a rate cut by the Reserve Bank of India yet, as expected by the market, the interest rate differential between the US and India is likely to rise, driving dollar/rupee forward premiums higher. Premiums on a currency pair's forwards reflect the interest rate differential between the two countries. 

Market participants are waiting for the US manufacturing PMI data, due later today. The ISM report on business manufacturing PMI for August is expected at 47.9 compared with 46.8 in July.

At 1453 IST, the premium on the one-year exact-period dollar/rupee contract was 178.97 paise, compared with 179.33 paise on Monday. On an annualised basis, the premium was 2.13%, compared with Monday's close of 2.14%.  (Sourabh Kumar)

India Rupee: In thin range; RBI's dlr sales offset oil cos' dlr buys

NEW DELHI – The rupee moved in a narrow range against the dollar as the impact of dollar purchases on behalf of oil marketing companies was offset by state-owned banks' dollar sales, likely for the Reserve Bank of India, dealers said. The rupee has moved in a range of only 3 paise so far today.

The central bank likely sold the greenback around 83.95 a dollar, to prevent the Indian unit from hitting a record low and falling below the psychologically-crucial level of 84-per-dollar, dealers said. The rupee hit a record low of 83.98 a dollar on Aug 12. 

"They (RBI) have been present since morning, it's unlikely they will let go of these levels," said a dealer at a big state-owned bank. Dealers expect the rupee to continue trading in a tight range of 83.90-83.95 a dollar for the rest of the day, with the RBI actively keeping its tight grip on the currency. 

On other hand, banks purchased the greenback on behalf of oil marketing companies, noting the fall in crude oil prices, dealers said. "Oil importers are constantly buying (dollars) since oil has been falling every day," said a dealer at another state-owned bank. 

Crude oil prices fell today as worries about the demand outlook owing to a slowing Chinese economy outweighed the impact of a blockade of oil production facilities in Libya. At 1255 IST, the November Brent crude contract on the Intercontinental Exchange was at $77.46 per bbl, compared with Monday's close of $77.52 a bbl. On Friday, it closed at $78.80 a bbl

Market participants now await a series of economic data in the US this week, including the US non-farm payrolls report, due Friday, for more cues on the likely size of the rate cut by the US Federal Reserve this month.

Dealers peg key technical support for the Indian currency at 84.00 a dollar.  (Pratiksha)

India Rupee: Technical Levels for rupee - Sep 3

MUMBAI – At 0900 IST, the rupee was at 83.9350 a dollar, against the previous close of 83.9175. At 1205 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: Falls slightly as dlr index strong; US econ data awaited

NEW DELHI – The rupee fell slightly against the dollar today as the dollar index hovered close to the near-two-week high it hit on Monday ahead of a slew of economic data in the US this week. 

Traders are waiting for multiple US economic data, particularly the US non-farm payrolls report, due Friday for further cues on the likely size of the rate cut by the US Federal Reserve this month. Before that, the US manufacturing purchasing managers' index later today, the US job openings data on Wednesday, along with the jobless claims report on Thursday are also awaited. 

Currently, the odds of the US central bank cutting interest rates by 50 basis points at its policy meeting this month are 31.0%, while the odds for a 25-bps rate cut are seen as having a 69.0% 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 101.71 compared with 101.64 on Monday, and 101.73 on Friday. The index rose to a near two-week high of 101.80 on Monday.

Dealers now expect the Reserve Bank of India to step in and intervene through dollar sales to keep the Indian unit from falling beyond its psychologically-crucial level of 84-per-dollar, as it has been doing in the past. "The RBI’s active intervention has kept the Rupee within this narrow band, and as long as the central bank maintains its grip, the rupee is likely to remain stable," Amit Pabari, managing director, CR Forex, said in a note. Pabari sees the rupee oscillating between 83.80 and 84.05 a dollar. 

"Since we are back to the old range, the only thing to look for is if 83.97 will be protected," a dealer at a private bank said. 

A fall in most Asian currencies also weighed on the Indian unit, dealers said. Asian units fell between 0.1-0.5% against the dollar today. 

For the rest of the day, the rupee is seen at 83.80-83.97 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 dn as dlr index strong; US econ data eyed

NEW DELHI – Most Asian currencies fell against the dollar today as the dollar index remained broadly strong ahead of a slew of economic data in the US this week. 

The dollar index hovered close to the near-two-week high it hit on Monday. Market participants are waiting for multiple key economic data, including the US non-farm payrolls report, due Friday, for more cues on the likely size of the rate cut by the US Federal Reserve this month. Economists surveyed by Reuters expect the addition of 165,000 US jobs in August, up from an increase of 114,000 in the previous month.

Before that, the US manufacturing purchasing managers' index later today, the US job openings data on Wednesday, along with the jobless claims report on Thursday are also awaited. Currently, the odds of the US central bank cutting interest rates by 50 basis points at its policy meeting this month are 31.0%, while the odds for a 25-bps rate cut are seen as having a 69.0% probability, as per the CME FedWatch Tool.

At 0840 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 101.71 compared with 101.64 on Monday, and 101.73 on Friday.

The South Korean won fell 0.2% against the dollar even after the country's headline inflation slowed to a 41-month low in August, cementing the case for the central bank to shift to policy easing in the coming months. The country's benchmark consumer-price index rose 2.0% from a year earlier, following a 2.6% gain in July, the country’s statistics office said today.

Further, reports said that South Korea will cut the size of its foreign exchange stabilisation fund by more than 30% next year, a record amount. The government says it is still enough to defend the won.

The Malaysian ringgit fell 0.5% against the dollar, the most among its peers. Malaysia's central bank will meet on Thursday. According to a Reuters poll, Bank Negara Malaysia will leave its key interest rate unchanged on Thursday, and keep it there at least through 2025 as growth remains robust and inflation stays under control.

Both the Phlippines peso and Indonesian rupiah were down 0.4% against the greenback. The Thai baht and the Taiwan dollar fell 0.2% against the US unit. (Pratiksha)

India Rupee : Expected range for rupee - Sep 3

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 Avishek Dutta

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