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Informist, Friday, Sep 6, 2024

By Pratiksha

NEW DELHI – The rupee ended slightly higher against the dollar today as foreign banks sold dollars for foreign fund inflows into domestic equities and the debt market, dealers said. However, some banks' dollar purchases for oil and other importers capped gains for the Indian currency, they said.

"There were small importer buys (of dollars) around such levels. Since these are not very lucrative levels," said a dealer at a private bank.  

Today, the Indian unit settled at 83.9475 a dollar, against Thursday's close of 83.9825 a dollar. Other emerging market units gained 0.1-0.6% against the greenback, with the Philippine peso being the best performer. The Indian rupee was the worst performing Asian unit today.  More

The Indian currency started the day at 83.9550 a dollar, after trading at 83.99 a dollar in the offshore market 10 minutes before, as the Reserve Bank of India is likely to have sold dollars in the offshore non-deliverable forwards market to prevent the rupee from hitting a record low at the open. The rupee hit a lifetime low of 83.9900 a dollar on Thursday. 

"It (RBI's dollar sales in NDF) was a very predictable move. They (the RBI) have to control NDF obviously, otherwise they can't hold in spot," said a dealer at a state-owned bank. 

Shortly after opening, the Indian unit jumped to the day's high of 83.9050 a dollar, as foreign banks stepped in to sell dollars for foreign fund inflows into domestic equities and the debt market, dealers said. 

Foreign banks sold dollars on behalf of overseas investors who are looking to invest in Bajaj Housing Finance Ltd's three-day initial public offering, which will open for public subscription on Monday and close on Wednesday. The company's offer comprises a fresh issue of shares worth up to 35.6 bln rupees and an offer for sale of up to 30 bln shares.

A portion of the foreign fund inflows were on account of overseas investment into the ongoing initial public offering of Shree Tirupati Balajee Agro, dealers said. The company's public offer opened for subscription on Thursday and will close on Monday. 

Following this, banks stepped in to buy dollars on behalf of oil and other importers, who wanted to take advantage of the relatively lower dollar/rupee levels, dealers said. However, the dollar purchases were not aggressive in nature, they said. 

"83.90-83.92 (a dollar) is not a very good level for an importer to buy (dollars). Only importers with genuine requirements will buy at these levels," said the dealer at a private bank.  

Further, some oil marketing companies bought dollars, also noting a fall in crude oil prices, which weighed on the Indian unit, dealers said. Crude oil prices have fallen almost 5% this week. At 1530 IST, the November Brent crude contract on the Intercontinental Exchange was at $72.67 per barrel, compared with $72.69 per bbl on Thursday.

Some dealers speculated that the central bank may have possibly bought the greenback around 83.90-a-dollar level, which also pressured the Indian unit. 

Meanwhile, the dollar index fell to an over one-week low during European trade, ahead of the release of the crucial US non-farm payrolls data, due later today, which supported the Indian unit, dealers said. However, the Indian unit did not take much relief from the same, they said. 

"See the global cues are not dictating the rupee's movement any more," said a dealer at a foreign bank. "Else, we would have seen some gap down (in dollar/rupee) at the open itself."
 

At 1530 IST, the dollar index, which measures the strength in the dollar against a basket of six major currencies, was at 100.99, compared with 101.06 on Thursday and 101.27 on Wednesday. The index fell an over one-week low of 100.84 earlier today. 

FORWARDS

The premium on the one-year dollar/rupee forward contract ended near a 16-month-high today, tracking a fall in US Treasury yields, dealers said. 

US Treasury yields fell after data on Thursday showed US private employers hired the least number of workers in three and a half years in August, and data for the prior month was revised lower. The economic data signalled that the labour market in the US was cooling down. The number of private jobs rose by 99,000 in August, below expectations of 145,000 private jobs in a Reuters poll. 

Market participants are now waiting for the crucial US non-farm payrolls data, due later today, for further cues on the timing and pace of rate cuts by the US Federal Reserve. Currently, the odds of the US central bank slashing interest rates by 50 basis points this month are 41%, while the odds of a 25-bps rate cut are 59%, as per the CME FedWatch Tool.

With the Fed likely to go for a rate cut, 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, pushing dollar/rupee forward premiums higher. Premiums on a currency pair's forwards reflect the interest rate differential between the two countries. 

Some banks and exporters sold dollars for forward delivery to take advantage of the relatively higher forward premium levels, which limited the rise in premiums, dealers said. The one-year dollar/rupee forward premium rose to a near 16-month high of 2.21% earlier today. 

Most dealers see the one-year dollar/rupee forward premium rising further to 2.25% in the near term. At 1530 IST, the premium on the one-year exact-period dollar/rupee contract was 184.66 paise, compared with 183.77 paise on Thursday. On an annualised basis, the premium was 2.20%, against Thursday's close of 2.19%.

OUTLOOK

On Monday, the rupee will take cues from the movement in the dollar index after the release of the US non-farm payrolls data, later today, dealers said. Market participants await economic data for further cues on the timing and pace of rate cuts by the US Fed.

The local unit will also take cues from movement in crude oil prices, they said. If crude oil prices continue to fall further, oil marketing companies may further demand the greenback to stock up on the commodity, according to dealers.

"Over the weekend, if the rupee falls below 84 (a dollar) offshore, only then do I see it at 84 in the spot," said a dealer at another foreign bank. "Even after 84, I don't see beyond 84.20."

Dealers expect the RBI to continue to keep the Indian unit from falling beyond its psychologically-crucial level of 84-per-dollar through its dollar sales interventions. Dealers expect the Indian unit to continue to move in a tight range against the greenback. 

During the day, the rupee is seen in a range of 83.85-84.00 a dollar, with strong technical support pegged at 84.00. 

India Rupee: Premium near 16-month high tracking fall in US yields

NEW DELHI – The premium on the one-year dollar/rupee forward contract rose to a near 16-month-high today, tracking a fall in US Treasury yields, dealers said. 

US Treasury yields fell after data on Thursday showed US private employers hired the least number of workers in three and a half years in August, and data for the prior month was revised lower. The economic data signalled that the labour market in the US was cooling down. The number of private jobs rose by 99,000 in August, below expectations of 145,000 private jobs in a Reuters poll. 

Market participants are now waiting for the crucial US non-farm payrolls data, due later today, for further cues on the timing and pace of rate cuts by the US Federal Reserve. Currently, the odds of the US central bank slashing interest rates by 50 basis points this month are 41%, while the odds of a 25-bps rate cut are 59%, as per the CME FedWatch Tool.

"See the NFP (non-farm payroll) report can be a big mover if it surprises either way," said a dealer at a private bank. "If it gives clarity that there will be a 50 bps cut (by the Fed this month), the forward levels may go maybe to 2.30%."

With the Fed likely to go for a rate cut, 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, pushing dollar/rupee forward premiums higher. Premiums on a currency pair's forwards reflect the interest rate differential between the two countries. 

Some banks and exporters sold dollars for forward delivery to take advantage of the relatively higher forward premium levels, which limited the rise in premiums, dealers said. The one-year dollar/rupee forward premium rose to a near 16-month high of 2.21% earlier today. 

Most dealers see the one-year dollar/rupee forward premium rising further to 2.25% in the near term. At 1455 IST, the premium on the one-year exact-period dollar/rupee contract was 184.66 paise, compared with 183.77 paise on Thursday. On an annualised basis, the premium was 2.20%, against Thursday's close of 2.19%. (Pratiksha)  

India Rupee: Tad up on FX inflows; importers' dlr buys cap gains

MUMBAI – The rupee was slightly higher against the dollar as foreign banks sold dollars for foreign fund inflows into domestic equities and the debt market, dealers said. However, banks' dollar purchases on behalf of oil marketing companies and other importers capped gains for the Indian unit, they said.

Banks bought the greenback on behalf of oil and other importers, who wanted to take advantage of the relatively lower dollar/rupee levels, dealers said. However, the dollar purchases were not aggressive in nature, they said. 

Oil marketing companies also purchased the greenack owing to a fall in crude oil prices. "The rupee will likely react to oil prices and developments in West Asia rather than to US data points right now," a dealer at a private bank said. At 1434, the November Brent crude contract on the Intercontinental Exchange was at $72.67 per barrel, compared to $72.69 per bbl on Thursday.

Foreign fund inflows were on account of overseas investment into the ongoing initial public offering of Shree Tirupati Balajee Agro, dealers said. The company's public offer opened for subscription on Thursday and will close on Monday. 

Market participants are now waiting for US non-farm payrolls data, due later today, which is expected to give more cues on the likely interest rate cuts by the US Federal Reserve this month. "Though market participants are awaiting the non-farm payrolls data today, the rupee is not responding to global cues any more", a dealer with a private bank said. 

Currently, the odds of a 50-basis-point rate cut by the Fed this month are 43%, compared to 34% last week, while those of 25 bps rate cut are 57%, according to CME FedWatch tool.

A sharp fall in domestic equities weighed on the Indian unit, dealers said. At 1430 IST, both the Nifty 50 and Sensex were down 1.3% each. 

Dealers do not expect the rupee's psychologically crucial level of 84 a dollar to break anytime soon, as they expect the central bank to defend the level through dollar sales. For the rest of the day, the rupee is seen at 83.90-83.99 against the dollar, dealers said. They peg key technical resistance for the Indian currency at 83.85 a dollar. (Gowri Lakshmi)

 India Rupee - Asia FX : Most rise as dollar index at 1-week low

Most Asian currencies rose against the dollar today as the dollar index fell to an over one-week low ahead of the US non-farm payrolls report later today. Economists surveyed by Reuters expect the report to show an increase of 165,000 US jobs in August, after a rise of 114,000 in July.

The US weekly jobless claims, released on Thursday, showed that the claims for state unemployment benefits dropped 5,000 to a seasonally adjusted 227,000 for the week ended Aug 31, less than the expected estimate of 230,000 claims in a Reuters poll. 

The Philippines' peso rose 0.6%, the most among its Asian peers. At 1223, the dollar index, which measures the strength of the dollar against a basket of six major currencies, fell to a week's low of 100.89, compared to 101.06 on Thursday and 101.27 on Wednesday. 

The South Korean won rose 0.4% against the greenback, after the country recorded a current account surplus for the third consecutive month in July. South Korea's current account surplus was at $9.13 bln in July. However, the surplus was smaller than the current account surplus of $12.56 bln in June, which was the largest since 2017. 

The Thai baht was up 0.3% against the dollar after the central bank's monetary policy committee maintained a flexible inflation target of 1-3% till this year, as a medium-term goal to ensure sustainable economic growth and financial stability. The government and Bank of Thailand are scheduled to meet later this month to set the inflation target for 2025.

The Indonesian rupiah was up 0.2% against the dollar. The country's foreign exchange reserves rose by $4.8 bln in August to a record high of $150.2 bln, the central bank said in a statement released today.

The Malaysian ringgit was up 0.1% against the greenback after the country's central bank, Bank Negara Malaysia, kept the overnight policy rate unchanged at 3.00%. 

The Chinese yuan remained flat against the dollar, following a statement by People's Bank of China deputy governor, which said the central bank will continue to keep its monetary policy accommodative to support the sluggish economy. China central bank official Zou Lan, in a press conference, said that "further interest rate cuts would be in accord with economic trends", reports said. 

Market participants now await the US non-farm payrolls data due later today for more cues on the quantum of the likely interest rate cut by the US Federal Reserve in the Federal Open Market Committee meeting this month. (Gowri Lakshmi)

 India Rupee: Tad up on FX inflows; RBI likely sold dlrs in NDF mkt

NEW DELHI – The rupee rose slightly against the dollar as some foreign banks sold the greenback, likely for foreign fund inflows, dealers said. A portion of the foreign fund inflows were on account of overseas investment into the ongoing initial public offering of Shree Tirupati Balajee Agro, dealers said. The company's public offer opened for subscription on Thursday and will close on Monday. 

Some dealers said banks sold dollars for foreign portfolio investment into the domestic debt market. Further, dealers said the Reserve Bank of India is likely to have sold dollars today in the offshore non-deliverable forwards market to prevent the rupee from hitting a record low at open. The rupee hit a lifetime low of 83.9900 a dollar on Thursday. 

The rupee was trading at 83.99 a dollar in the offshore market 10 minutes before the domestic spot market opened at 0900 IST, when it opened at 83.9550 a dollar. "If it was not for them (the RBI), the rupee would have easily crossed 84 (a dollar) in spot," said a dealer at a state-owned bank. 

The central bank has been steadfast in keeping the rupee from hitting the psychologically-crucial level of 84-per-dollar since last month. Dealers expect the RBI to continue doing the same.

Meanwhile, the dollar index fell to a week's low on Thursday after several economic data this week showed an easing labour market in the US, which supported the Indian unit, according to dealers. At 0950 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 100.97 compared with 101.06 on Thursday, and 101.27 on Wednesday. The index fell to a week's low of 100.96 on Thursday.

Market participants now await the crucial US non-farm payrolls data, due later today, for further cues on the timing and pace of rate cuts by the US Federal Reserve. 

For the rest of the day, the rupee is seen at 83.85-84.00 against the dollar, dealers said. They peg immediate technical resistance for the Indian currency at 83.90 a dollar. (Pratiksha)

India Rupee : Expected range for rupee - Sep 6

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

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