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Informist, Tuesday, Oct. 1, 2024

By Gowri Lakshmi

MUMBAI – The rupee ended steady against the dollar on Tuesday as state-owned banks sold dollars, likely on behalf of the Reserve Bank of India, preventing the rupee from falling due to a rise in the dollar index. "The market moved steady throughout the day and the RBI intervened from offshore and spot," a dealer at a private bank said. "There is heavy resistance at 83.82-83.90 levels," another dealer at a state-owned bank said. 

The dollar index rose after the US Federal Reserve chair Jerome Powell indicated a softer-than-expected rate cut in the upcoming meeting. Further, the fall in Asian currencies, too, put downward pressure on the rupee. The rupee settled at 83.8200 a dollar Tuesday, falling for the fourth consecutive trading day. The rupee moved in a tight range of under 4 paise.

In the offshore market, the rupee traded a tad lower against the dollar, tracking a rise in the dollar index, the dealer said. However, traders speculated that the Reserve Bank of India intervened in the offshore non-deliverable forwards markets through their dollar sales to prevent the rupee from opening lower against the dollar. Soon after opening, the rupee reached the day's low of 83.8275 as banks purchased the greenback, likely on behalf of importers, including oil marketing companies, dealers said. 

The dollar index weighed on the rupee as the index rebounded after US Fed chair Jerome Powell's comments at a conference in Tennesee, where he indicated that the central bank will slash interest rates by another 50 basis points, but will likely stick with two rate cuts of 25 basis points each in the upcoming meetings this year. "If the economy evolves as expected, that would be two more cuts," Powell said. "This is not a committee that feels like it is in a hurry to cut rates quickly," he added.

Powell's comments pushed back the expectations of traders of a super-sized rate cut. Currently, according to the CME FedWatch tool, traders price in a 39.8% probability of a 50-bps rate cut and 60.2% probability of a 25-bps rate cut in the November policy meeting. 

Further, a fall in Asian currencies, citing the rise in the dollar index, also put downward pressure on the local unit. Asian currencies fell 0.1-1.2%, with the Malaysian ringgit being the worst performer. At 1530 IST, the dollar index which measures the strength in the dollar against six major currencies was, 101.11 against its previous close of 100.76 on Monday and 100.42 on Friday. 

However, the Indian unit was supported by exporters' sale of dollars, given the relatively higher dollar/rupee levels. "The market is slow-moving today, exporters were active with many more waiting for the rupee to fall to the 83.90-84.00 levels," a dealer at a state-owned bank said. Dealers said the Reserve Bank of India likely intervened through their dollar sales to prevent the rupee from falling sharply to the psychologically crucial level of 84 a dollar and curb excessive volatility.

Market participants now await the job openings and labor turnover survey due later on Tuesday, along with the final estimate for manufacturing activity in September. Further, traders will also keenly watch the non-farm payrolls data, due Friday, with market analysts estimating a growth of 147,000 jobs and the unemployment rate to fall slightly to 4.3%.

FORWARDS

Premium on the one-year dollar/rupee forward contract eased on Tuesday, tracking a rise in US Treasury yields after comments from Federal Reserve Chair Jerome Powell doused hopes of a 50-basis-point rate cut at the next meeting, dealers said. 

US Treasury yields rose on Monday as Powell said the central bank might continue with less significant interest rate cuts going forward even as the policy-setting Federal Open Market Committee kicked off its easing cycle with a larger-than-expected half-percentage-point reduction at its last policy meeting on Sept. 17-18.

At 1530 IST, the premium on the one-year exact-period dollar/rupee contract was 199.17 paise, against 199.43 paise on Monday. On an annualised basis, the premium was 2.38%, unchanged from Monday's close. 

OUTLOOK

On Wednesday, Indian financial markets are shut on account of Gandhi Jayanti. On Thursday, the rupee will track movements in the dollar as well as take cues from crude oil prices. "The rupee will likely touch 83.82-83.90 a dollar in the coming days," a dealer at a state-owned bank said. "However, we expect the exporters to sell dollars given the attractive levels, which will keep the rupee within the 83 level," he added.

Dealers expect the RBI to keep the Indian unit from falling sharply and touching its psychologically-crucial level of 84-per-dollar, through its dollar sales. During the day, the rupee is seen in a range of 83.75-83.85 a dollar, with strong technical support pegged at 83.90.  

India Rupee - World FX: Dollar index strengthens after Powell's speech

MUMBAI – The dollar index rebounded on Tuesday following a softer-than-expected stance on interest rate cuts by the US Federal Reserve chair Jerome Powell at the upcoming policy meeting. Powell, in his speech at a conference in Tennessee on Monday, said the central bank will likely stick with two more interest rate cuts this year with quarter-basis-point reductions each. 

"The economy is in solid shape, we intend to use our tools to keep it there," Powell said. "This is not a committee that feels like it is in a hurry to cut rates quickly," he added. His remarks pushed back the expectations of investors of a super-sized rate cut, with fed fund futures traders now seeing a 38.8% probability of a 50 bps rate cut and a 61.2% probability of a 25 bps rate cut in November, according to CME FedWatch tool. 

The New Zealand dollar was down 0.5%, tracking a rise in the dollar index. The dollar index, which measures the strength of the dollar against six major currencies, was 101.02, compared to its previous close of 100.76 on Monday and 100.42 on Friday. 

The pound sterling was down 0.3% against the greenback after data released today showed that the UK manufacturing purchasing manager's index fell to 51.5 in September. The manufacturing PMI fell from a 26-month high of 52.5 in August. Business confidence in the UK also fell to a 9-month low.  

The euro was down 0.3% against the dollar as the data released early Tuesday showed that the Eurozone manufacturing PMI stood at 45.0 in September, down from 45.8 in August. Europe's largest economy Germany's manufacturing PMI fell to 40.6 in September, down from 42.4 in August. Germany's manufacturing sector contracted at its fastest pace in September, reports said.

The Japanese yen was down 0.1% against the greenback. The Bank of Japan's "tankan" survey showed business sentiment in Japan remained steady in Jul-Sept. The tankan survey is closely watched by the Bank of Japan in setting the monetary policy and inflation forecast. The Japanese central bank's next policy meeting is on Oct 30-31.

The Australian dollar and the Canadian dollar traded flat against the greenback. (Gowri Lakshmi)

India Rupee: Remains steady as RBI's dollar sales offset rise in dollar index

MUMBAI – The rupee remained steady against the dollar as state-owned banks sold the greenback, likely on behalf of the Reserve Bank of India, which offset a rise in the dollar index after US Federal Reserve Chair Jerome Powell's remarks, dealers said. "They (RBI) were there in the non-deliverable forwards offshore market in the morning, now they are active in spot," a dealer at a private bank said. 

The dollar index rebounded on Tuesday after US Fed Chair Powell took a softer-than-expected stance regarding future interest rate cuts this year, which pushed back expectations of another super-sized interest rate cut by the central bank. Powell said in his speech at a conference in Tennessee that the central bank sees two more rate cuts this year with a reduction of quarter-basis-points each, "if the economy performs as expected," he said. 

Currently, Fed fund futures show a 36.8% probability of a 50-basis-point rate cut in November and a 63.2% chance of a 25-bps rate cut, according to the CME FedWatch tool.

"There is strong demand for dollar today, other Asian currencies are also down, tracking the dollar index," a dealer at a private bank said. At 1321 IST, the dollar index, which measures the strength of the dollar against six major currencies, was 100.95, compared to its previous close of 100.76 on Monday and 100.42. 

Further, banks purchased dollars on behalf of importers, including oil marketing companies, which put downward pressure on the local unit, dealers said. The Indian unit also came under pressure, citing a fall in Asian currencies, which fell 0.1-1.2%. However, the state-owned banks sold the greenback, which prevented the rupee from falling to the psychologically crucial level of 84 a dollar. 

Dealers expect banks to sell dollars on behalf of exporters, noting strong technical support around 83.80 a dollar, which may aid the Indian unit. For the rest of the day, the rupee is seen in the range of 83.70-83.85 against the dollar, dealers said. They see immediate technical support for the Indian currency at 83.85 a dollar. (Gowri Lakshmi)

India Rupee: Premiums ease as Powell hints at shallower rate cut in Nov

MUMBAI – Premium on the one-year dollar/rupee forward contract eased on Tuesday, tracking a rise in US Treasury yields after comments from Federal Reserve Chair Jerome Powell doused hopes of a 50-basis-point rate cut at the next meeting, dealers said. "Premiums are easing now because UST (US Treasury yields) shot up by 6 bps, but they will rise again going forward," a dealer at a big state-owned bank said. 

US Treasury yields rose on Monday as Powell said the central bank might continue with less significant interest rate cuts going forward. "This is not a committee that feels like it is in a hurry to cut rates quickly," Powell said at a National Association for Business Economics conference, even as the policy-setting Federal Open Market Committee kicked off its easing cycle with a larger-than-expected half-percentage-point reduction at its last policy meeting on Sept. 17-18.

Post Powell's speech, Fed funds futures showed that the odds of a 50-bps rate cut at the US Fed's next meeting in November fell to 38.2% from 53.3% on Monday, according to the CME FedWatch tool. Investors will now look to September's non-farm payrolls report on Friday, which will provide cues about the rate cut path of the US central bank.

"The NFP (non farm payroll) may come lower than expected which will again boost the premiums, we are seeing it go to 2.50% levels befoe flattening," a dealer at another state-owned bank said. At 1343 IST, the premium on the one-year exact-period dollar/rupee contract was 198.92 paise, against 199.43 paise on Monday. On an annualised basis, the premium was 2.37% against Monday's close of 2.38%. (Kabir Sharma)

India Rupee: Technical Levels for rupee - Oct 1

NEW DELHI – At 0900 IST, the rupee was at 83.8050 a dollar, from its previous close of 83.7925. At 1116 IST, the rupee was at 83.8000 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: Most dn as dlr index up; Malaysian ringgit worst hit

NEW DELHI – Most Asian currencies fell against the dollar Tuesday as the dollar index strengthened after US Federal Reserve Chair Jerome Powell's remarks on Monday dampened expectations of another large rate cut by the US central bank this year. Powell said the US central bank would likely stick with quarter-percentage-point interest rate cuts moving forward. "This is not a committee that feels like it is in a hurry to cut rates quickly," he said. The US Federal Open Market Committee kicked off its easing cycle with a 50-basis-point rate cut at its September meeting. 

Following Powell's speech, Fed fund futures showed a 38.2% probability of a 50-bps rate cut in November and a 61.8% chance of a 25-bps rate cut, according to the CME FedWatch tool. At 1020 IST, the dollar index, which measures the strength of the dollar against six major currencies, was at 100.82, compared to 100.76 on Monday and 100.42 on Friday.

The Malaysian ringgit fell 1.1% against the dollar, the most amongst its Asian peers. The Taiwan dollar was down 0.6% against the greenback. Multiple media reports said that Taiwan has mobilised nearly 40,000 troops Tuesday in preparation for search-and-rescue operations, with the powerful Typhoon Krathon approaching its populous southwest coast and expected to bring a storm surge.

The South Korean won was also down 0.5% against the dollar after data released Tuesday showed that the pace of the country's export growth slowed in September. Exports rose 7.5% in September from a year ago, decelerating from an 11.2% rise in the previous month. The preliminary trade surplus widened to $6.66 billion from $3.77 billion a month earlier.

The Philippine peso fell 0.1% against the dollar. The country's central bank said Monday that inflation is likely to stay within the 2.0-2.8% range in September, reports said. 

The Indonesian rupiah fell 0.4% against the US unit. Bucking the trend, the Thai baht was flat against the dollar. The Thai National Shippers' Council said Tuesday that the country's exports are expected to rise 2% this year, but the rapidly strengthening baht could be a challenge for the rest of the year, reports said.(Pratiksha) 

India Rupee: Steady; RBI's likely dlr sales in NDF mkt offset dlr index rise

NEW DELHI – The rupee was largely steady against the dollar as the impact of a rise in the dollar index was offset by the Reserve Bank of India's likely intervention through dollar sales in the offshore non-deliverable forwards market, dealers said. The central bank is likely to have intervened to prevent the Indian unit from falling sharply, they said. "They (RBI) were selling (dollars) pre-market in the morning," said a dealer at a state-owned bank. "Looks like 83.80 is the new level now."

The rupee was around 83.83-83.84 a dollar in the offshore market 10 minutes before the domestic spot market opened at 0900 IST, when the Indian unit opened at 83.8050 a dollar. Some dealers speculated that the central bank may also be intervening through dollar sales in the domestic spot market.

The dollar index rose after US Federal Reserve Chair Jerome Powell's speech on Monday pushed back expectations of another large interest rate cut by the central bank this year. Powell said in his speech at a conference in Tennessee that he sees two more interest rate cuts, totalling 50 basis points, this year as a baseline "if the economy performs as expected," and cautioned that it would likely take several years before housing services inflation eases to desirable levels.

Fed fund futures show a 38.2% probability of a 50-bps rate cut in November and a 61.8% chance of a 25-bps rate cut, according to the CME FedWatch tool. At 0940 IST, the dollar index, which measures the strength of the dollar against six major currencies, was at 100.82, compared to 100.76 on Monday and 100.42 on Friday. The index had fallen to a low of 100.18 on Monday.

A fall in Asian currencies, tracking a rise in dollar index, also weighed on the Indian currency, dealers said. Emerging market units fell between 0.1-1.1% against the dollar today. Dealers expect banks to sell dollars on behalf of exporters, noting strong technical support around 83.80 a dollar, which may aid the Indian unit.

For the rest of the day, the rupee is seen in the range of 83.75-83.85 against the dollar, dealers said. They see immediate technical support for the Indian currency at 83.80 a dollar. (Pratiksha)

India Rupee: Expected range for rupee - Oct 1

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 Akul Nishant Akhoury

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