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Informist, Thursday, Sep 26, 2024

By Gowri Lakshmi and Pratiksha

MUMBAI – The rupee ended slightly lower against the dollar today, but erased a significant portion of its losses in the last leg of the trade as some foreign and private banks sold the greenback, likely for foreign fund inflows, dealers said. "Some selling (of dollars) came in the end. Foreign banks were active. Custodian flows possibly," said a dealer at a state-owned bank.

A rise in the dollar index and constant demand for the greenback from oil companies and other importers throughout the day weighed on the rupee, dealers said. Moreover, banks persistently bought dollars to cover their existing short dollar bets ahead of the front-month currency futures contract expiry, which pressured the Indian currency, they said. 

After touching a low of 83.7175 a dollar during the day, the rupee settled at 83.6425 a dollar today, compared to its previous close of 83.5925. The Indian unit moved in a range of 8 paise today. "There were both selling and buying (of dollars) today which balanced out the movement (for rupee) in the second half," a dealer at another state-owned bank said.

The rupee opened slightly lower against the greenback as the dollar index recovered from a one-week low it hit on Wednesday, dealers said. The dollar index rose ahead of the weekly US jobless claims, Apr-Jun third estimate GDP data and an address by US Federal Reserve Chair Jerome Powell at the New York Treasury Market Conference, all due later today.

Currently, Fed fund futures show a 60.8% probability of a 50 basis point rate cut and a 39.2% chance of a 25 basis point rate cut in November, according to the CME FedWatch tool.

"The dollar index has risen, since morning it has been impacting and weighing on the rupee movement. The rise in US treasury yields also added to the (dollar) index strengthening," a dealer at a state-owned bank said. At 1530, the dollar index, which measures the strength of the dollar against six major currencies, was 100.87, compared to its previous close of 100.92 on Wednesday and 100.35 on Tuesday. 

Shortly after the market opened, the rupee came under more pressure as banks bought dollars to cover their existing short dollar bets ahead of the front-month currency futures contract expiry. "Everyone was winding off their currency future position. It was a fixing game today," said a dealer at a private bank. "It was obvious that fixing would come at a high (in dollar/rupee)."

Further, oil marketing companies rushed to purchase the greenback noting a fall in crude oil prices, which dragged the local unit to the day's low of 83.7175 a dollar. Crude oil prices fell 2% on Wednesday as concerns about disruption in supply from Libya eased and as Saudi Arabia decided to increase its oil production. However, worries about demand from China, the largest oil importer, continued to affect oil prices despite the country's recent stimulus plans. At 1530 IST, the November Brent Crude Contract on the Interontinental Exchange was $71.92 per barrel, compared to previous close of $73.46 per barrel on Wednesday.

Banks' persistent dollar demand on behalf of importers, who wanted to meet their month-end payment obligations, also weighed on the Indian unit, they said. However, some foreign banks sold the greenback, likely on behalf of overseas investors looking to invest in the ongoing initial public offering of KRN Heat Exchanger and Refrigeration Ltd, which gave support to the Indian unit, dealers said. The company's public offer opened for subscription on Wednesday and will close on Friday.

The Chinese yuan rose 0.3% against the greenback, extending its gains from Wednesday, which aided the Indian rupee today, after the People's Bank of China announced multiple policy easing measures on Tuesday to stimulate the sluggish economy. 

The rupee traded around 83.68-83.71 a dollar for most of the session, but erased almost 5 paise of its losses in the last thirty minutes as foreign banks stepped in to sell dollars for foreign fund inflows, likely into the domestic equities and debt markets, dealers said. 

FORWARDS

Premium on the one-year dollar/rupee forward contract ended steady today as banks' dollar purchases for forward delivery offset the impact of a rise in US Treasury yields, dealers said.

Banks purchased dollars for forward delivery on the expectation that the dollar/rupee forward premiums may rise further in the coming days, dealers said. Premium on the one-year dollar/rupee forward premium has jumped over 28 bps so far this month. 

With the Fed expected to go for more rate cuts this year, and no sight of a rate cut by the Reserve Bank of India yet, 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. 

The yield on the 10-year US Treasury note rose as traders waited for the release of multiple economic data from the US, which weighed on the premiums, dealers said.

At 1530 IST, the premium on the one-year exact-period dollar/rupee contract was 201.00 paise, against 201.54 paise on Wednesday. On an annualised basis, the premium was 2.40%, unchanged from Wednesday's close.

OUTLOOK

On Friday, the rupee will take cues from movement in the dollar index after the release of the US Apr-Jun third estimate GDP and weekly jobless claims data later today, dealers said. Multiple Fed officials, including Chair Jerome Powell's speech at a conference in New York is also due later today. The Indian currency may also take cues from movement in crude oil prices and offshore Chinese yuan, they said.

Dealers expect foreign banks to continue to sell dollars on behalf of foreign portfolio investors, which may aid the Indian unit. However, they also expect importers to continue to buy dollars to meet their month-end requirements, weighing on the local unit. 

The RBI may continue to intervene in the currency market to kill excessive volatility in the exchange rate, they said. During the day, the rupee is seen at 83.50-83.70 a dollar, with technical support pegged at 83.70.

India Rupee: Premium steady; bks' fwd dlr buys offset rise in US yld

MUMBAI – Premium on the one-year dollar/rupee forward contract was steady today, as dollar purchases by banks for forward delivery offset the downward push received from a rise in the benchmark US Treasury yield, dealers said.

"Some paying (buying dollars for forward delivery) is happening in the forward market, and the view of paying on dips still holds," a dealer with a state-owned bank said. 

Banks purchased dollars for forward delivery, as they expect the dollar/rupee forward premiums to rise further, dealers said. With more rate cuts on the cards by the US Federal Open Market Committee, and no sight of a rate cut by the Reserve Bank of India Monetary Policy Committee yet, as seen by market participants, the interest rate differential between the US and India is expected to widen, thus driving the forward premiums higher. Premiums on forwards of a currency pair are reflective of the interest rate differential between two countries. 

Moreover, some banks also sold dollars for forward delivery, noting a relatively higher dollar/rupee forward premium, dealers said. This limited the rise in one-year dollar/rupee forward premiums, they said.

The yield on the 10-year US Treasury note rose 5 basis points on Wednesday as traders waited for the release of multiple economic data from the US. The third estimate of US GDP for Apr-Jun is due later today, with the personal consumption expenditure on Friday. Investors also look forward to an address by US Federal Reserve Chair Jerome Powell at the New York Treasury Market Conference later today.

With the path of the Fed rate cut visible for at least this year, market participants await the RBI's Monetary Policy Committee meeting decision, for cues regarding the domestic interest rate trajectory, dealers said. After cutting rates by 50 bps last week, the Fed is likely to cut rates by another 50 bps by the end of this calendar year, as seen from the latest Summary of Economic Projections. 

At 1409 IST, the premium on the one-year exact-period dollar/rupee contract was 201.00 paise, against 201.54 paise on Wednesday. On an annualised basis, the premium was 2.40%, similar to Wednesday's close.  (Sourabh Kumar)

India Rupee: Down as banks purchase dollars for oil cos, importers

MUMBAI – The rupee remained weak against the dollar as banks persistently purchased the greenback on behalf of oil marketing companies, dealers said. Demand for dollars from general importers to meet their month-end payment obligations also weighed on the Indian unit, they said.

"Nats (state-owned banks) have been buying since morning," a dealer with a private bank said. "It is largely for oilers, and then in general there is good buying from importers as well."

After opening slightly lower, the rupee fell further. Oil marketing companies purchased the greenback, noting a fall in crude oil prices, with Brent crude falling over 2% today from Wednesday's close, dealers said. At 1246 IST, the November crude oil contract on the Intercontinental Exchange was $71.68 per barrel, compared to $73.46 per bbl on Wednesday. On Tuesday, it was $75.17 a bbl.

Crude prices fell after Saudi Arabia decided to increase its oil production, according to a report by Financial Times. Prices also fell as concerns about disruption in crude supply from Libya eased.

A recovery in the dollar index also weighed on the rupee, dealers said. At 1301 IST, the dollar index, which measures the strength of the dollar against six major currencies, was 100.94, against 100.92 on Wednesday and 100.35 on Tuesday. The index had fallen to a week's low of 100.22 on Wednesday.

Market participants are waiting for the third estimate of US GDP for Apr-Jun, due later today, as well as the US personal consumption expenditure data, due Friday. Investors also look forward to an address by US Federal Reserve Chair Jerome Powell at the New York Treasury Market Conference later today.

"I think the rupee will fall near 83.74 a dollar today, due to persistent pressure," the dealer with the private bank said. For the rest of the day, the rupee is seen in a range of 83.50-83.70 against the dollar, dealers said. They see immediate technical support for the Indian currency at 83.70 a dollar. (Sourabh Kumar)

India Rupee: Technical Levels for rupee - Sep 26

NEW DELHI – At 0900 IST, the rupee was at 83.6425 a dollar, against the previous close of 83.5925. At 1100 IST, the rupee was at 83.6725 per dollar. The following are key support and resistance levels for the rupee as provided by leading banks and brokerages:

(Pratiksha)

India Rupee - Asia FX: Mixed before US econ data, Fed Powell's speech

MUMBAI – Asian currencies moved on a mixed note against the dollar as market participants await speeches by multiple US Federal Reserve officials, including Fed Chair Jerome Powell's, speech later today at a conference in New York, for cues on further interest rate cuts by the Fed. Traders also await the weekly jobless claims data and the US Apr-Jun third estimate GDP data due today and personal consumption expenditure figures due on Friday.

The dollar index recovered from the one-week low it hit on Wednesday ahead of the key economic data, which weighed on the Asian currencies. At 1032 IST, the dollar index, which measures the strength of the dollar against six major currencies, was 100.92, compared with its previous close of 100.92 on Wednesday and 100.35 on Tuesday. 

The South Korean won was down 0.6% against the dollar after data released on Wednesday showed consumer sentiment declined for the second consecutive month in September. The composite consumer sentiment index fell to 100.0 from 100.8 in August. However, losses in the currency were limited due to gains in domestic equities. As of 0930 IST, the benchmark index KOSPI was up 2.1%. 

The Indonesian rupiah was down 0.4% against the greenback. The Malaysian ringgit was down 0.2% against the dollar. Bank Negara Malaysia's deputy governor Adnan Zaylani Mohamand Zahid said on Wednesday that the currency has been strengthening due to "greater clarity on the interest rate path of developed countries, especially the US Federal Reserve," reports said. 

The Chinese yuan was up 0.2% against the dollar, extending its gains from Wednesday after the People's Bank of China announced multiple measures to boost the slowing economy. Bloomberg reported on Wednesday that China is considering injecting up to $142.39 bln of capital into its biggest state banks to increase their capacity to support the struggling economy. Further, China will give one-off cash handouts to people in extreme poverty before Tuesday, as another measure to stimulate the slowing economy, reports said. 

The Philippines peso was down 0.2% against the greenback after Philippine central bank Governor Eli Remolona on Wednesday said two more rate cuts are possible this year, signalling a more aggressive easing cycle after the US Fed's outsized rate cut. The Taiwan dollar was flat against the dollar, while the Thai baht was up 0.2%. (Gowri Lakshmi)

India Rupee: Falls as dollar index recovers ahead of key US econ data

NEW DELHI – The rupee fell against the dollar today as the dollar index recovered from the one-week low it hit on Wednesday, dealers said. The dollar index rose ahead of the weekly US jobless claims data and an address by US Federal Reserve Chair Jerome Powell at the New York Treasury Market Conference, both due later today.

As per the CME FedWatch tool, Fed fund futures show a 62.3% probability of a 50-basis-point rate cut and a 37.7% chance of a 25-bps cut by the Fed in November. At 0940 IST, the dollar index, which measures the strength of the dollar against six major currencies, was 100.94, compared to its previous close of 100.92 on Wednesday and 100.35 on Tuesday. The index fell to a week's low of 100.22 on Wednesday. Market participants also await the US Apr-Jun third estimate GDP data, due later today, as well as the US personal consumption expenditure data, due on Friday.

Further, some dealers said that banks bought dollars to cover their existing short dollar bets ahead of the front-month currency futures contract expiry, which weighed on the Indian unit. "The lower opening is because of dollar strength, and there are fixed bids (buying of dollars) for the expiry of the futures contract," a dealer at a private bank said. 

However, a fall in crude oil prices limited the losses for the Indian unit, dealers said. Crude oil prices fell over 2% on Wednesday as concerns about supply disruptions in Libya eased, and demand worries continued despite China's recent stimulus plans. At 0940 IST, the November crude contract on the Intercontinental Exchange was $73.57 per barrel, compared to $73.46 per bbl on Wednesday. On Tuesday, it was $75.17 a bbl.

"I think the limited range (for the rupee) will persist," a dealer at a state-owned bank said. "Some upside (in the rupee) may come in due to inflows, but that will be limited too." For the rest of the day, the rupee is seen in the range of 83.50-83.70 against the dollar, dealers said. They see immediate technical support for the Indian currency at 83.70 a dollar. (Pratiksha)

India Rupee : Expected range for rupee - Sep 26

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 Aditya Sakorkar

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