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Informist, Friday, Oct. 11, 2024

By Gowri Lakshmi

MUMBAI – After staying between 83- and 84-a-dollar level for nearly two years, the rupee on Friday breached the psychologically crucial level of 84 per dollar for the first time as foreign banks continuously purchased dollars on behalf of overseas investors looking to withdraw from the domestic equity market, dealers said. Investors have been selling local shares for the past few days as tensions in West Asia inflicted a risk-off sentiment, they added.  

"Market breached 84, few stop-losses were triggered. If it breaches 84.10, then it will breach all the stop-loss in the market and might as well fall to 84.30," a dealer at a private bank said.

A surge in the dollar index, coupled by demand for dollar on inflows into safe-haven assets weighed on the Indian unit. The Indian rupee was the worst performing currency among its Asian peers. However, a rise in Asian currencies, aided the rupee in paring losses. Most Asian currencies were up against the dollar on a rise in domestic indices. Most currencies were up 0.3-0.7%, with the Indonesian Rupiah being the best performer.

This is after two years that the rupee had breached another psychologically crucial level. On Oct. 19, 2022, the rupee had breached 83-per-dollar. The rupee crossed 84-a-dollar level Friday despite the Reserve Bank of India steadfastly trying to prevent a depreciation beyond the psychologically crucial level. 

The rupee opened steady at 83.9600 against the dollar and hovered around 83.97 level for lack of cues. However, state-owned banks soon began selling the greenback on behalf of the Reserve Bank of India as foreign banks purchased the dollars on behalf of overseas investors who were looking to withdraw from the domestic equity market, dealers said. 

Soon after the market opened, the rupee was weighed on by a rising dollar demand from oil marketing companies as crude oil prices jumped over $4 per barrel on Thursday. Oil marketing companies rushed to purchase the dollar in anticipation of a further increase in crude prices, citing supply-side disruption from geopolitical tensions in West Asia, dealers said. 

Further, the Indian rupee was also weighed down by a surge in the dollar index. The index rose closer to the two-month-high it had touched on Thursday after data showed the US CPI rose 0.2% in September, up from economists' expectations of a 0.1% rise in a Reuters poll. Another set of data released on Thursday showed the US jobless claims rose more than expected. The individuals claiming unemployment benefit jumped to 258,000, the highest in a year and well above the estimate of 229,000 by analysts in a Reuters poll.

After moving in a wide range of 11 paise during the day, the rupee fell to 84/$ after investors came under a risk-off sentiment as tensions in West Asia took a new turn. Israeli forces fired at three United Nations positions in Lebanon, injuring at least two UN Interim Forces, in the past 24 hours. Also on Friday, Israeli air strikes on Beirut left 22 dead and more than 100 wounded. 

As of Wednesday, overseas investors had pulled out $5.7 billion from the Indian stock market. On Friday, both benchmark indices, Sensex and NIFTY50 settled lower at 0.28% and 0.14% respectively. Upon breaking the psychologically crucial level of 84-per-dollar, stop losses were triggered, which further took the rupee to 84.07 a dollar. The Reserve Bank of India stepped in through their dollar sales after "letting" the rupee depreciate to prevent it from falling sharply beyond the 84.10 level, dealers said. 

Further, the Indian unit was also aided as banks sold dollars, on behalf of exporters, who were waiting for the rupee to hit 84/$, took advantage of the depreciation in the local currency. "Exporters were selling (the dollars) slightly, they are not agressive today. They are waiting for the rupee to now breach another key level, probably 84.24-per-dollar, broadly exporters participate at this level," a dealer at a private bank said.

FORWARDS

Premium on the one-year dollar/rupee forward contract was steady as some banks sold the greenback for forward delivery after the premium touched a high of 2.24% on Friday, dealers said. 

Market participants sold dollars for forward delivery on expectations that the one-year dollar/rupee forward premium would not rise as much as previously thought, dealers said. The expectation started building after the stronger-than-expected non-farm payrolls report released on Oct. 4 indicated an underlying strength in the US economy. This weighed on another 50-basis-point rate cut by the US Federal Reserve, dealers said.

A rise in the benchmark US Treasury yield also weighed on the dollar/rupee forward premium, dealers said. The 10-year US Treasury yield settled 3 basis points higher at 4.09% on Thursday. 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 forward contract was 186.04 paise, against 184.92 paise on Thursday. On an annualised basis, the premium was 2.21%, against Thursday's close of 2.20%.

OUTLOOK

On Monday, the rupee will take cues from the movement in the dollar index and crude oil prices. Market participants keenly await the US producer price index due later in the day for further insight into the interest rate trajectory by the US Federal Reserve at its November policy meeting. Traders expect the PPI for September to have risen 0.1% on month after rising 0.2% in August, according to a Dow Jones poll. 

Dealers now expect the exporters to actively sell the dollars to take advantage of the relatively higher dollar/rupee levels, which may aid the Indian rupee from falling sharply further. Dealers will also keep an eye on further interventions by the Reserve Bank of India. During the day, the rupee is seen in a range of 83.90-84.10 a dollar, with strong technical support pegged at 84.10.

India Rupee - World FX:Sterling up as UK GDP grows after 2 mos of stagnation

India Rupee - World FX: Sterling up as UK GDP grows after 2 months of stagnation

MUMBAI – The pound sterling rose 0.1% against the dollar as data released Friday showed the UK economy expanded 0.2% in August after being stagnant for the previous two months. However, traders still see the Bank of England cutting interest rates by 25 basis points at its November policy meeting, reports said.

The euro was steady against the greenback after the latest inflation data from Germany matched the preliminary figures. The German Harmonized Index of Consumer Prices rose 1.8% on year in September, but was down from a 2.0% rise in August.

The Japanese yen was down 0.2% against the dollar following comments by Bank of Japan Deputy Governor Ryozo Himino, who on Thursday said the central bank will consider a further interest rate hike if the monetary policy committee has "greater confidence" around meeting the economic and price forecasts.

The Swiss franc rose 0.1% against the greenback on safe-haven asset demand. However, gains were capped as Swiss National Bank Vice Chair Antoine Martin hinted that the central bank may consider lowering interest rates further, potentially even taking them to negative territory to boost the economy, reports said.

The dollar index rose close to the two-month-high it had touched on Thursday after data showed the US CPI rose 0.2% in September, up from economists' expectations of a 0.1% rise in a Reuters poll. Another set of data released on Thursday showed the US jobless claims rose more than expectations. The individuals claiming unemployment benefit jumped to 258,000, the highest in a year and well above the estimate of 229,000 by analysts in a Reuters poll.

Further, Atlanta Federal Reserve Bank President Raphael Bostic said in an interview with The Wall Street Journal that he would be "totally comfortable" skipping an interest-rate cut at the upcoming meeting of the US central bank, adding that the "choppiness" in recent data on inflation and employment may warrant leaving rates on hold in November.

As of Friday, the odds of a 25-basis-point rate cut by the Fed are 85.4% against 80.3% a day before, according to the CME FedWatch Tool. At 1547 IST, the dollar index, which measures the strength of the dollar against six major currencies, was 102.90, against 102.88 on Thursday as well as on Wednesday. The dollar index had surged to a near two-month high of 103.18 on Thursday.

Market participants are now waiting for the US Producer price index for September that will be released later in the day. A Dow Jones poll forecasts the index to have risen 0.1% on month in September, after rising 0.2% in August.  (Gowri Lakshmi)

India Rupee: Breaches 84/$ on foreign bks' dlr buys for FPI outflows

India Rupee: Breaches 84/$ on foreign bks' dlr buys for FPI outflows 

MUMBAI – The rupee breached the psychologically crucial mark of 84/$, despite dollar sales by the Reserve Bank of India, as foreign banks persistently bought the greenback for outflows from domestic equities, dealers said. Some dealers said stop losses were also triggered around 84/$ level which took the rupee to 84.07 a dollar. 

"There were major outflows from equities today, some stop losses were also triggered but there are more waiting. They (RBI) are there at 84.10 so don't think that will be breached," a dealer at a large state-owned bank said. 

Dealers said the outflows from equities were due to risk-off sentiment among traders due to rising tensions in West Asia. The head of UN peacekeeping informed the Security Council that the safety and security of peacekeepers in Lebanon is "growingly at risk," following Israeli forces firing on United Nations Interim Force in Lebanon in the southern region, resulting in two injuries. Also on Friday, Israeli air strikes on Beirut left 22 dead and more than 100 wounded. 

The rupee was also weighed down as stop losses were triggered around 84/$ level but as it touched 84.07 a dollar level, further depreciation was capped by the RBI's dollar sales. "At 84.10 it would breach all stop losses in the market," a dealer at a foreign bank said. 

Strength in the dollar index also weighed on the Indian currency, dealers said. The dollar index strengthened after data showed US CPI rose 0.2% in September, against economists' expectations of a 0.1% rise in a Reuters poll. At 1110 IST, the dollar index, which measures the strength of the dollar against six major currencies, was 102.90, compared to 102.88 on Thursday and 102.88 on Wednesday. The dollar index had surged to 103.18 on Thursday, the highest since Aug. 15.

For the rest of the day, the rupee is seen in the range of 83.90-84.10 against the dollar, dealers said. They see strong technical support for the Indian currency at 84.10 a dollar. (Kabir Sharma)

India Rupee: Technical Levels for rupee - Oct 11

MUMBAI – At 0900 IST, the rupee was at 83.9600 a dollar, from its previous close of 83.9675. At 1130 IST, the rupee was at 83.9875 per dollar. The following are key support and resistance levels for the rupee as provided by leading banks and brokerages:

(Sourabh Kumar)

India Rupee: Hits record low but RBI's dollar sales prevent breach of 84/$

MUMBAI – The rupee hit a record low of 83.9950 a dollar as foreign banks persistently bought dollars for foreign fund outflows from domestic equities, dealers said. However, the Reserve Bank of India is likely to have sold the greenback to prevent the rupee from falling beyond the crucial level of 84 per dollar, they said.

"Today, there is a lot of pressure (on the rupee), but the central bank is there to protect the figure (84 a dollar)," a dealer with a private bank said. "Foreign banks are buying, probably for equities outflows, and oil pressure is also there." The Nifty 50 was down 0.2% and the BSE Sensex fell 0.3% in early trade on Thursday.

Dealers said oil marketing companies were purchasing the greenback, anticipating further rise in oil prices, which also weighed on the rupee. Oil prices rose due to supply concerns amid the ongoing conflict in West Asia, and rising demand for fuel in the US in the wake of hurricane Milton in Florida. At 1109 IST, the December Brent crude contract on the Intercontinental Exchange was $79.15 per barrel, compared to $79.40 on Thursday and $76.58 on Wednesday. 

Strength in the dollar index also weighed on the Indian currency, dealers said. The dollar index strengthened after data showed US CPI rose 0.2% in September, against economists' expectations of a 0.1% rise in a Reuters poll. At 1110 IST, the dollar index, which measures the strength of the dollar against six major currencies, was 102.90, compared to 102.88 on Thursday and 102.88 on Wednesday. The dollar index had surged to 103.18 on Thursday, the highest since Aug. 15.

For the rest of the day, the rupee is seen in the range of 83.90-84.00 against the dollar, dealers said. They see strong technical support for the Indian currency at 84.00 a dollar.  (Sourabh Kumar)

India Rupee - Asia FX: Most up as Asian equities gain; Korean won up 0.6%

MUMBAI – Most Asian currencies traded higher against the dollar, tracking gains in the equities market. The South Korean won was up 0.6% against the greenback due to a rise in the domestic index, the Kospi, which was up 0.5%. However, gains were limited as the Bank of Korea slashed its benchmark policy interest rates by 25 basis points for the first time in four-and-a half years. The Bank of Korea cut its interest rate to 3.25% to boost the slowing economy. 

The Indonesian rupiah was up 0.5% against the dollar as the Jakarta Stock Exchange rose 0.7% Thursday. The Malaysian ringgit moved up 0.2% against the greenback, tracking gains in the domestic stock market, Bursa Malaysia, which rose 1.5% in early Asian trade. 

The Thai baht was up 0.4% against the greenback. However, traders remain cautious ahead of the next monetary policy committee meeting on the backdrop of an ongoing tussle between the central bank and government on cutting benchmark rates. The Bank of Thailand is expected to maintain the status quo at 2.50% at its policy meeting next week on Oct. 16, a Reuters poll showed.

Meanwhile, a strength in the dollar index capped gains in the Asian currencies. The dollar index strengthened after the US consumer price index showed stronger-than-expected figures. The CPI rose 0.2% in September, up from economists' expectations of a 0.1% rise in a Reuters poll. The inflation had risen 0.2% on month in August. On a yearly basis, inflation rose 2.4%, more than the 2.3% rise forecast in a Reuters poll. The annual inflation was, however, the smallest in over three and a half years.

At 1017 IST, the dollar index, which measures the strength of the dollar against six major currencies, was 102.89, compared to 102.88 on Thursday and 102.88 on Wednesday. The dollar index surged to a high of 103.18 on Thursday, the highest since Aug. 15.  (Gowri Lakshmi)

India Rupee: Steady as US econ data fails to give cues on Fed rate outlook

MUMBAI – The rupee was largely steady against the dollar on Friday as mixed economic data in the US on Thursday failed to provide further cues on the US Federal Reserve's interest rate trajectory, dealers said. "The data on Thursday came with a dilemma on rate cuts in November. Both CPI and jobless claims data rose, making it complicated for the market to analyse the rate cuts. The next few data may help us (get cues) about the November (interest rate) policy," a dealer at a state-owned bank said.

The US September inflation print was higher than expected, suggesting price pressure persisted in the economy, while the US initial jobless claims jumped, pointing towards softening of the labour market. This perplexed market participants about whether the Fed will cut rates at its November policy meeting or maintain the status quo. 

The dollar index jumped to a near two-month high on Thursday after the stronger-than-expected consumer price index data, which weighed on the Indian unit, dealers said. At 1000 IST, the dollar index, which measures the strength of the dollar against six major currencies, was 102.87, compared to 102.88 on Thursday and 102.88 on Wednesday. The dollar index surged to a near-two-month high of 103.18 on Thursday. 

Further, oil prices rose about 4% on Thursday as demand from the US increased in the wake of Hurricane Milton in Florida, which also weighed on the Indian currency, dealers said. At 1000 IST, the December Brent crude contract on the Intercontinental Exchange was $79.12 per barrel, compared to $79.4 on Thursday and $77.18 on Wednesday. 

Meanwhile, the Indian unit received support from a rise in other Asian currencies, dealers said. Most Asian currencies rose against the dollar, tracking gains in domestic equities. Some dealers speculated that the Reserve Bank of India may have intervened through dollar sales to prevent the rupee from falling to its psychologically-crucial level of 84 per dollar, which also aided the Indian unit. 

For the rest of the day, the rupee is seen in the range of 83.90-83.99 against the dollar, dealers said. They see strong technical support for the Indian currency at 84.00 a dollar. (Gowri Lakshmi)

India Rupee: Expected range for rupee - Oct 11

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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