More Stories

Informist, Thursday, Oct. 3, 2024

By Gowri Lakshmi

MUMBAI – The rupee ended at its lowest level in over three weeks against the dollar on Thursday as the dollar index strengthened to a one-month high and oil marketing companies and foreign portfolio investors purchased the greenback persistently, dealers said. However, state-owned banks sold the greenback, likely on behalf of the Reserve Bank of India, which limited losses for the local unit and prevented it from falling beyond the psychologically-crucial level of 84-per-dollar, they said.

"They (RBI) have been there since morning, else there is no chance that 84 (a dollar) could not have been broken," a dealer at a state-owned bank said. After depreciating 0.2% against the dollar, the rupee settled at 83.9675 a dollar on Thursday, just shy of its lifetime low of 83.9900 a dollar, hit on Sept. 5. The rupee moved in a range of just 7 paise throughout the day.

Other Asian currencies fell 0.1%-1.1% against the greenback, with the Malaysian ringgit being the worst hit. The Indian currency was the second-best performer after the offshore Chinese yuan.

The rupee opened 10 paise lower against the dollar as the dollar index rose to a one-month-high Thursday after the US ADP national employment report, released Wednesday, showed private payrolls rose more than expected in September. The report showed US private payrolls increased by 143,000 jobs in September after rising by an upwardly revised 103,000 in August. Economists polled by Reuters had forecast 120,000 job additions. The dollar index also gained as traders moved to the safe-haven currency amid rising geopolitical tensions in West Asia, dealers said. 

At 1530 IST, the dollar index, which measures the strength of the dollar against six major currencies, was at 101.91 compared with 101.60 Wednesday and 101.21 Tuesday. The dollar index rose to a one-month high of 101.92 Thursday, the highest since Sept. 3.

However, losses for the Indian currency at the open were limited as the RBI likely sold the greenback in the offshore non-deliverable forwards market to prevent the rupee falling sharply, dealers said. 

Shortly after opening, oil marketing companies rushed to purchase the greenback, fearing a further rise in crude oil prices amid an escalation of geopolitical tensions in West Asia, dealers said. Crude oil prices rose due to rising concerns of supply-side disruptions. At 1530 IST, the December Brent Crude contract on the Intercontinental Exchange was $75.28 per barrel, compared with its previous close of $73.90 Wednesday.

Further, foreign banks purchased the greenback on behalf of FPIs looking to pull out money from domestic equities and debt markets owing to weak risk appetite amid the escalation in geopolitical tensions in West Asia, dealers said. The benchmark indices, the Nifty 50 and the BSE Sensex, ended 2.1% lower each. "The equity sell-off was a big negative for the rupee," a dealer at a private bank said. "If the geopolitical situation becomes worse, the rupee may eventually fall to 84."

However, state-owned banks sold the greenback, likely on behalf of the RBI, around 83.95 a dollar, which prevented the Indian unit from falling beyond the key level of 84-per-dollar, dealers said. "It is expected. They (RBI) will sell (dollars) at 83.98 and buy (dollars) at 83.50 (a dollar). Everybody knows that," said a dealer at another state-owned bank.

The domestic unit was also supported by some exporters' dollar sales as soon as it touched the day's low of 83.9725, dealers said. Some exporters sold the greenback to take advantage of the relatively higher dollar/rupee levels, dealers said.

"Exporters are getting active. However, most are still waiting for the rupee to hit the 84 (a dollar) mark," a dealer at another private bank said. "The dollar is expected to rise further ahead of the US (presidential) elections. If Trump wins, the dollar is definitely going to strengthen. But for now, the rupee may stay at 83.96 levels," he added. The US will vote for its next president on Nov. 5.

FORWARDS

Premium on the one-year dollar/rupee forward contract ended slightly higher despite a rise in the benchmark US Treasury yield, dealers said. 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 after US private payrolls rose more than expected in September. 

Market participants had expected the one-year dollar/rupee forward premium to fall after the US Treasury yields rose Wednesday. When that did not happen, banks bought the greenback for forward delivery on the view that the premiums would rise further, dealers said. With the US Federal Reserve embarking on an easing cycle with a 50-basis-point rate cut, the one-year dollar/rupee forward premium has risen nearly 27 bps since September.

With the Fed expected to opt for further rate cuts this year, and no sign of a rate cut by the RBI yet, the interest rate differential between the US and India is likely to go up, pushing dollar/rupee forward premiums higher.

At 1530 IST, the premium on the one-year exact-period dollar/rupee contract was 200.98 paise, against 199.17 paise Tuesday. On an annualised basis, the premium was 2.39% against Tuesday's close of 2.38%.

OUTLOOK

On Friday, the rupee will take cues from movement in the dollar index and crude oil prices. Traders will closely watch geopolitical developments in West Asia. “The supply-side disruptions from West Asia will cause crude prices to climb, too. The rupee will be under pressure in the coming weeks," a dealer at a state-owned bank said.

Dealers expect the RBI to continue to keep the Indian unit from falling sharply and touching the psychologically-crucial level of 84-per-dollar through its dollar sales interventions. Market participants now await the US non-farm payroll data due out Friday. "There is a high chance of the rupee breaching the 84 levels if the NFP (non-farm payroll) data comes out strong, otherwise it will probably still remain around the 83.90 levels," a dealer at another private bank said. 

During the day, the rupee is seen in a range of 83.85-83.98 a dollar, with strong technical support pegged at 84.00.

India Rupee - World FX: Pound sterling falls 1.1% after BoE Bailey's remarks

MUMBAI – The pound sterling fell to a three-week low Thursday, down 1.1% against the dollar, after Bank of England Governor Andrew Bailey said the central bank could "be a bit aggressive" in cutting interest rates. Bailey said in an interview with The Guardian that if inflation remains in check, the bank might be able to be "more activist" over reducing borrowing costs. 

The Bank of England slashed interest rates by 25 basis points to 5% in August, the first time in four years. Investors now expect another 25-bps rate cut at its next policy meeting in November. 

The Australian dollar was down 0.6% against the dollar after data released Thursday showed Australia's composite purchasing manager's index declined to 49.6 in September from 51.7 in August. A print below 50 in the PMI indicates contraction in economic activity.

The New Zealand dollar was down 0.6%, tracking a slump in the Australian dollar. However, losses for both the commodity-linked currencies were limited as crude prices edged higher amid escalating geopolitical tension in West Asia. At 1530 IST, the November Brent crude contract on the Intercontinental Exchange was at $75.42 per barrel, compared to its close of $73.90 on Wednesday. 

The Japanese yen was down 0.3% against the dollar after Japan's newly-elected Prime Minister Shigeru Ishiba said the country was not ready for additional rate hikes, after meeting Bank of Japan Governor Kazuo Ueda on Wednesday. Bank of Japan policymaker Asahi Noguchi on Thursday said the central bank had scope for further interest rate hikes but "must move cautiously and slowly" to avoid hurting the economy.

The dollar index rose to a month's high after the ADP national employment data released on Wednesday showed that US private payrolls rose more than expected. The robust economic data dampened expectations that the US central bank will cut rates by another 50 basis points when it meets next month.

At 1436 IST, the dollar index, which measures the strength of the dollar against six major currencies, was at 101.88 compared to 101.60 on Wednesday and 101.21 on Tuesday. The dollar index rose to a one-month high of 101.92 on Thursday, the highest since Sept. 3.

The euro was down 0.1% against the dollar. Market participants now await the non-farm payrolls data due Friday for more cues on the US Federal Reserve's easing cycle.  (Gowri Lakshmi)

India Rupee: Remains down as dollar index rises; RBI's dlr sales avert 84/$1

India Rupee: Remains down as dollar index rises; RBI's dlr sales avert 84/$1

MUMBAI – The rupee remained lower against the dollar as the dollar index rose to a 1-month high on Thursday and foreign banks purchased the greenback on behalf of foreign portfolio investors looking to withdraw funds from domestic markets, dealers said. However, state-owned banks sold dollars, likely on behalf of the Reserve Bank of India, which limited losses in the Indian unit, they said. 

The dollar index strengthened after a stronger-than-expected US private payrolls report on Wednesday dampened expectations that the US central bank will cut rates by another 50 basis points when it meets next month. At 1239 IST, the dollar index, which measures the strength of the dollar against six major currencies, was 101.63, compared to its previous close of 101.60 on Wednesday and 101.21 on Tuesday. The dollar index rose to a one-month high of 101.88 on Thursday, the highest since Sept. 3. Currently, Fed fund futures show a 35.9% probability of a 50-bps rate cut in November, whereas the probability of a 25-bps cut is seen at 64.1%, according to the CME FedWatch tool.

Further, foreign banks bought dollars on behalf of FPIs, who looked to pull out money from the domestic equities and debt market amid the escalation of geopolitical tensions in West Asia which further weighed on the Indian unit. "Outflows were triggered owing to risk-off sentiment amongst investors," a dealer at a private bank said. At 1340 IST, both the Nifty 50 and Sensex were down 1.9% each. 

Dealers said the Reserve Bank of India likely sold dollars to prevent the rupee from falling beyond the psychologically crucial level of 84-per-dollar, dealers said. "The nats (nationalised banks) are selling at 83.95 levels. The rise in the dollar index is heavily weighing on the rupee," a dealer at a private bank said. 

Crude oil prices rose due to rising concerns about supply-side disruptions amid the escalation of geopolitical tensions in West Asia. Israeli forces struck central Beirut early Thursday, killing at least six civilians and wounding 11, the Lebanese health ministry said in a statement, as per reports. Iran attacked Israel on Tuesday after it fired more than 180 ballistic missiles, reports said. At 1250 IST, the November Brent Crude contract on the Intercontinental Exchange was $75.04 per barrel, compared to its previous close of $73.90 on Wednesday. 

Dealers expect some exporters to sell the greenback to take advantage of the relatively higher dollar/rupee levels, which may aid the Indian currency. They expect the RBI to continue intervening in the spot market through dollar sales throughout the day to prevent the rupee from falling sharply and breaching the 84-a-dollar level.

Market participants now keenly await the US non-farm payrolls data due on Friday. For the rest of the day, the rupee is seen in a range of 83.90-83.98 against the dollar, dealers said. They see strong technical support for the Indian currency at 84.00 a dollar.  (Gowri Lakshmi)

India Rupee: Technical Levels for rupee - Oct 3

MUMBAI – At 0900 IST, the rupee was at 83.9150 a dollar, from its previous close of 83.8200. At 1112 IST, the rupee was at 83.9375 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 as dollar index hits 3-week high, crude oil prices rise

MUMBAI – The rupee opened lower against the dollar as the dollar index rose to a 3-week-high in early trade after the US ADP national employment report showed US private payrolls rose more than expected in September, dealers said. The Indian unit was also down due to a rise in crude oil prices amid escalating tensions in West Asia and a slump in domestic equities, they said.

Some banks speculated that the Reserve Bank of India may have intervened in the offshore non-deliverable forwards market to prevent the local unit from inching towards the psychologically crucial level of 84-a-dollar. "They (RBI) have been selling (dollars) in offshore but very mildly. The narrow range (for rupee) should continue," said a dealer at a private bank. 

The dollar index rose to a 3-week high early on Thursday as data released Wednesday showed that the US private payrolls increased by 143,000 jobs in September after rising by an upwardly revised 103,000 in August. Economists polled by Reuters had forecast 120,000 job additions. The strong economic data and recent comments from Federal Reserve Chair Jerome Powell on Monday have dampened expectations that the US central bank will cut rates by another 50 basis points when it meets next month. Market participants now keenly await the non-farm payrolls data, due later on Friday. 

A sharp fall in most Asian currencies, tracking a rise in the dollar index, also weighed on the Indian currency, dealers said. At 1000 IST, the dollar index, which measures the strength of the dollar against six major currencies, was 101.77, compared to its previous close of 101.60 on Wednesday and 101.21 on Tuesday. 

Further, crude oil prices rose due to rising concerns about supply-side disruptions amid the escalation of geopolitical tensions in West Asia. "The big names have now entered the conflict in West Asia, the market now has a risk-off sentiment as geopolitical tensions escalate," a dealer at a private bank said. At 1000 IST, the November Brent crude contract on the Intercontinental Exchange was $74.75 per barrel, compared to its previous close of $73.90 on Wednesday. 

Domestic equities slumped as risk sentiment dampened amid the ongoing geopolitical tension in West Asia, which weighed on the local unit, dealers said. At 1000 IST, both the Nifty 50 and Sensex were down 0.9% each. 

Dealers expect the exporters to sell the greenback, noting the relatively higher dollar/rupee levels, which may aid the Indian currency. They also expect the RBI to intervene in the spot market through dollar sales to prevent a sharp fall in the currency. 

For the rest of the day, the rupee is seen in the range of 83.85-83.98 against the dollar, dealers said. They see strong technical support for the Indian currency at 84.00 a dollar.  (Gowri Lakshmi)

India Rupee - Asia FX: Down as dlr index hits 3-wk high on strong economic data

MUMBAI – Asian currencies traded lower against the greenback as the dollar index rose to a three-week high after the ADP national employment data released on Wednesday showed a higher than expected increase in private payrolls in the US in September.

Private payrolls in the US increased by 143,000 jobs in September after rising by an upwardly revised 103,000 in August. Economists polled by Reuters had forecast 120,000 job additions. The strong economic data and comments by Federal Reserve Chair Jerome Powell on Monday dampened expectations that the US central bank will cut rates by another 50 basis points when it meets next month.

The Malaysian ringgit fell 1.0% against the dollar, the worst hit amongst its Asian peers. At 0855 IST, the dollar index, which measures the strength of the dollar against six major currencies, was 101.77, compared to its previous close of 101.60 on Wednesday and 101.21 on Tuesday. The Indonesian rupiah fell 0.8% against the dollar.

The South Korean won was 0.6% down against the greenback as data released on Wednesday showed consumer price inflation in South Korea declined more than expected and below the central bank's target for the first time since 2021. The consumer price index rose 1.6% on year in September, after a rise of 2.0% in August. The print was weaker than 1.9%, as expected in a Reuters poll. Traders now anticipate an imminent interest cut by the Bank of Korea at its next policy meeting scheduled for Oct. 11.

The Thai baht was down 0.5% against the dollar. The country's central bank faced severe pressure from a leading Thai business group on Wednesday to slash interest rates, backing the government's calls for rate cuts, reports said. The business group also flagged concerns about the impact on exports from a rapidly appreciating baht. The finance ministry and the Bank of Thailand are scheduled to meet later this week to discuss the inflation rate target and currency performance, as per reports. The next meeting of the rate review panel is scheduled on Oct. 16. 

The Philippine peso was down 0.2% against the dollar. However, losses in the currency were limited, tracking gains in domestic equities. At 0930 IST, the benchmark PSEi index was up 0.7%.  (Gowri Lakshmi)

India Rupee : Expected range for rupee - Oct 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:

(Gowri Lakshmi)

End

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

Edited by Vidhi Verma and Rajeev Pai

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

Informist Media Tel +91 (22) 6985-4000 

Send comments to feedback@informistmedia.com

© Informist Media Pvt. Ltd. 2024. All rights reserved.