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Informist, Friday, Sep 27, 2024

By Gowri Lakshmi and Pratiksha

MUMBAI – The rupee ended slightly lower against the dollar today as banks purchased the greenback on behalf of importers, including oil marketing companies, dealers said. However, a weak dollar index limited losses for the Indian unit, they said.

"There was buying in the market, especially for oilers," a dealer with a private bank said. "We expected it to touch 74 (83.74 a dollar) levels today, and if not, then we expect it to fall further next week."

Oil prices fell for the third consecutive session, prompting oil marketing companies to purchase dollars, which weighed on the Indian unit. Further, the Indian currency also came under downward pressure as general importers bought the greenback to meet their month-end payment obligations, dealers said. 

After touching a high of 83.6150 a dollar, the rupee settled at 83.7000 a dollar today, compared to its previous close of 83.6425 a dollar. The Indian unit moved in a range of 10 paise today. 

The rupee opened flat against the dollar today as traders were cautious ahead of the US personal consumption expenditure data, the Federal Reserve's preferred gauge of inflation, to be released later today, dealers said. The US personal consumption expenditure price index is expected to have risen 2.3% on year in August, down from 2.5% the previous month, according to a Dow Jones poll. The personal consumption expenditure core price index is expected to have risen 2.7% in August after rising 2.6% in July, according to the poll. Traders await the crucial data for further cues on future interest rate cuts by the US Federal Reserve at its policy meeting in November. 

Shortly after the market opened, the Indian unit came under pressure as oil importers rushed to purchase the greenback noting a sharp fall in crude oil prices, dealers said. Oil prices fell for the third consecutive session today after Saudi Arabia, the world's top crude exporter, decided to increase its oil output. Further, traders focused on expectations of higher oil supplies from Libya and the Organisation of Petroleum Exporting Countries and their allies. At 1530 IST, the November Brent crude contract on the Intercontinental Exchange was at $71.77 per barrel, compared to its previous close of $71.60 on Thursday. 

Banks also persistently bought the greenback on behalf of importers, who wanted to meet their month-end payment obligations, which further weighed on the rupee, dealers said. However, losses in the local unit were limited owing to broad-based weakness in the dollar index, owing to expectations of further rate cuts by the Fed. At 1530 IST, the dollar index, which measures the strength of the greenback against six major currencies, was at 100.46, compared to its previous close of 100.57 on Thursday and 100.92 on Wednesday. 

The losses in the Indian rupee were also limited as banks sold some greenaback, likely on behalf of overseas investors looking to invest in the ongoing initial public offering of KRN Heat Exchanger and Refrigeration Ltd, which supported the Indian unit, dealers said. The company's public offer opened for subscription on Wednesday and closed today. 

Volume in the currency market was lower than usual today as most traders refrained from placing fresh bets ahead of the key US personal consumption expenditure data, due later today. "There is not much volume in the market, the US data will be the one that should trigger a directional movement (in the rupee)," said a dealer at a state-owned bank.

FORWARDS

The premium on the one-year dollar/rupee forward contract fell today, as banks sold dollars for forward delivery after strong US economic data on Thursday dimmed hopes of another 50 bps rate cut by the Fed in November, dealers said. 

Data released on Thursday showed that the number of Americans filing new applications for unemployment benefits declined to a four-month low last week, indicating that the labour market remained resilient. Further, the third estimate of Apr-Jun GDP showed the US economy expanded at an unrevised pace of 3.0% on year. Growth in Jan-Mar was revised up to 1.6% from the previous estimate of 1.4%.

Following the data, Fed fund futures show a 47.3% probability of a 50-basis-point rate cut by the Fed in November, down from 60% a day ago and a 52.7% chance of a 25-bps rate cut, according to the CME FedWatch tool. 

Banks also sold dollars for forward delivery to take advantage of the broadly higher dollar/rupee forward premium level ahead of the US personal consumption expenditure price index later today, which weighed on the premiums, dealers said. Premium on the one-year dollar/rupee forward has risen over 28 bps so far this month. "The (US)PCE data can throw a surprise, we never know. That's why we are seeing some receiving today," said a dealer at a private bank. 

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.

At 1530 IST, the premium on the one-year exact-period dollar/rupee contract was 199.34 paise, against 201.00 paise on Thursday. On an annualised basis, the premium was 2.38% against Thursday's close of 2.40%.

OUTLOOK

On Monday, the rupee will take cues from the movement in the dollar index after the release of the US personal consumption expenditure data due later today, dealers said.

"On Monday, the USD/INR (dollar/rupee) is expected to go up as the dollar index may rise post PCE data, the core inflation is expected to rise," a dealer at a private bank said. "The rupee is expected to depreciate further in the coming weeks,” he added.

Dealers expect the Reserve Bank of India to keep the Indian unit from falling beyond its psychologically-crucial level of 84-per-dollar through its dollar sales interventions. On the other hand, they expect the central bank to intervene through dollar purchases if the rupee rises above 83.50 a dollar.  

During the day, the rupee is seen in a range of 83.65-83.80 a dollar, with strong technical support pegged at 83.80.  

India Rupee: Premium falls as bks sell fwd dlrs before US econ data

MUMBAI – The premium on the one-year dollar/rupee forward contract fell today, as banks sold dollars for forward delivery, exercising caution ahead of the release of key US inflation data, dealers said.

"In the morning itself, there was a little bit of panic-receiving, because they wanted to exit their positions before today's PCE (US personal consumption expenditure) data," a dealer with a state-owned bank said.

Many banks also sold dollars for forward delivery, noting a relatively higher dollar/rupee forward premium, dealers said. The one-year dollar/rupee forward premium has been on a rising trend since the speculation around the Federal Reserve grew. Once the Federal Open Market Committee cut rates by 50 basis points last week, the one-year premium saw a quick rise. 

Dealers said today's fall in the one-year premium was largely because of caution ahead of crucial US data. And, premiums are broadly expected to rise, going ahead. "I think today's fall is a one-off, and the one-year (dollar/rupee forward premium) is likely to rise to touch 2.50%," the dealer with the state-owned bank said.

With more rate cuts by the US Federal Open Market Committee on the cards 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. 

The yield on the benchmark 10-year US Treasury note ended unchanged at 3.79% on Thursday, as investors waited for the release of more economic data from the US to assess the health of the US economy. The US personal consumption expenditure price index, which will come out after Indian market hours today, and is the Fed's preferred gauge of inflation, is expected to rise 2.3% on year in August compared with 2.5% the month before, according to a Dow Jones poll. The personal consumption expenditure core price index is expected to rise 2.7% in August compared with 2.6% in July, according to the poll.

At 1447 IST, the premium on the one-year exact-period dollar/rupee contract was 199.34 paise, against 201.00 paise on Thursday. On an annualised basis, the premium was 2.38% against Thursday's close of 2.40%.  (Sourabh Kumar)

India Rupee: Steady before US econ data; importers' dlr buys weigh

MUMBAI – The rupee remained steady against the dollar today as market participants were cautious of placing large bets ahead of the personal consumption expenditure data from the US later today, dealers said. "It is all side-ways ahead of PCE, there is some normal importer buying and some oilers but no big movement is expected before the data point," a dealer at a big state-owned bank said. 

The US personal consumption expenditure price index, the Federal Reserve's preferred gauge of inflation, is expected to rise 2.3% on year in August compared with 2.5% the month before, according to a Dow Jones poll. The personal consumption expenditure core price index is expected to rise 2.7% in August compared with 2.6% in July, according to the poll.

Currently, Fed fund futures show a 49.3% probability of a 50-basis-point rate cut and a 50.7% chance of a 25-basis-point rate cut in November, according to the CME FedWatch tool. At 1359 IST, the dollar index, which measures the strength of the dollar against six major currencies, was 100.70, compared to 100.57 on Thursday and 100.92 on Wednesday.

Some banks bought the greenback for month-end demand of importers and oil marketing companies, dealers said. Oil marketing companies rushed to stock up on the commodity due to a fall in crude oil prices, they said. Oil futures fell over 3% on Thursday after a report by The Financial Times said that Saudi Arabia is all set to increase its crude output. This, coupled with the planned increase in oil output by the Organization of the Petroleum Exporting Countries and allies in December, weighed on crude oil prices.

Dealers said they expect strong technical support for the rupee at around the 83.70 a dollar level. (Kabir Sharma)

India Rupee - Asia FX: Mixed ahead of key US economic data

MUMBAI – Asian currencies were mixed against the dollar today as market participants are waiting for the US personal consumption expenditure data that will be released later in the day. The data may give more cues on further interest rate cuts by the US Federal Reserve. 

The US personal consumption expenditure price index is expected to have risen 2.3% on year in August compared with 2.5% the month before, according to a poll by Dow Jones. The personal consumption expenditure core price index is expected to have risen 2.7% in August after rising 2.6% in July, according to the poll.

Currently, Fed fund futures show a 50.7% probability of a 50-basis-point rate cut and a 49.3% chance of a 25-bps rate cut in November, according to the CME FedWatch tool. The dollar index fell Thursday as the Swiss franc rose after the Swiss National Bank slashed interest rates by 25 bps instead of the widely expected rate cut of 50 bps. At 0920 IST, the dollar index, which measures the strength of the dollar against six major currencies, was 100.67, against 100.57 on Thursday and 100.92 Wednesday. The Malaysian ringgit was up 0.6% against the dollar, tracking weakness in the dollar index.

The Thai baht was down 0.2% against the greenback. Thailand's finance ministry officials are set to meet officials of the Bank of Thailand to discuss the inflation framework and exchange rate issues next week. Deputy Finance Minister Paopoom Rojanasakul Thursday said the discussions will focus on maintaining exchange rates at an appropriate level given the baht's rapid strengthening recently, reports said.

"The local currency is more volatile against the greenback than the currencies of our regional peers, particularly our trading competitors," Rojanasakul said. "We need to sit down and discuss these issues because we cannot allow the currency to continue appreciating, as it is affecting the country's exports and tourism," he added. 

The offshore Chinese yuan was flat against the dollar. Chinese leaders Thursday pledged to deploy necessary fiscal spending to meet this year's economic growth target of around 5%, acknowledging new problems and raising market expectations for fresh stimulus on top of measures announced this week, reports said.

Both the Philippines peso and Indonesian rupiah were up 0.1% against the greenback. The South Korean won was flat against the dollar. (Gowri Lakshmi)

India Rupee: Steady as traders cautious ahead of key US economic data

NEW DELHI – The rupee was largely steady against the dollar today as traders exercised caution ahead of the key US personal consumption expenditure price index, the Federal Reserve's preferred gauge of inflation, to be released later today, dealers said.

Market participants are waiting for the key economic data for more cues on the US Fed's easing cycle. "All eyes now turn to today's Personal Consumption Expenditures Price Index, which could significantly shape the USD's (US dollar) trajectory in the days ahead. Stronger-than-expected data could propel the DXY (dollar index) towards 101.90, while weaker data may push it down to 100.20," Amit Pabari, managing director, CR Forex, said in a note. 

The US personal consumption expenditure price index is expected to have risen 2.3% on year in August, down from 2.5% the previous month, according to a Dow Jones poll. The personal consumption expenditure core price index is expected to have risen 2.7% in August after rising 2.6% in July, according to the poll.

Currently, Fed fund futures show a 50.7% probability of a 50-basis-point rate cut and a 49.3% chance of a 25-basis-point rate cut in November, according to the CME FedWatch tool. At 0930 IST, the dollar index, which measures the strength of the dollar against six major currencies, was 100.67, compared to 100.57 on Thursday and 100.92 on Wednesday. 

Dealers expect strong dollar demand on behalf of oil marketing companies during the day, noting the fall in crude oil prices, which could weigh on the Indian unit. Crude oil prices fell for the third consecutive session as investors focused on expectations of higher supplies from Libya and the broader Organization of the Petroleum Exporting Countries. At 0930 IST, the November Brent crude contract on the Intercontinental Exchange was at $71.44 per barrel, compared to its close of $71.60 on Thursday. 

"We have been seeing quite a lot of demand (for dollars) this week. It is month-end also, so the pressure (on the rupee) will be there," said a dealer at a private bank. For the rest of the day, the rupee is seen in the range of 83.55-83.70 against the dollar, dealers said. They see technical support for the Indian currency at 83.70 a dollar. (Pratiksha)

India Rupee: Expected range for rupee - Sep 27

NEW DELHI – Following are the expected support and resistance levels for the rupee today, as forecast by leading banks and brokerages in an Informist poll:

(Pratiksha)

End

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Tanima Banerjee

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