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Informist, Monday, Oct. 14, 2024

By Gowri Lakshmi 

MUMBAI – The rupee ended flat against the dollar on Monday as banks sold the greenback, likely on behalf of the Reserve Bank of India, which offset the impact of a rise in the dollar index, dealers said. Some exporters sold dollars to take advantage of the relatively higher dollar/rupee levels, which also aided the Indian unit, they said.

"The rupee did not cross 84.08 today, but the dollar was well bid against it as RBI sold dollars to protect it. The range for tomorrow (Tuesday) is expected between 83.96 to 84.15," said Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors LLP. The local currency settled at 84.0600 against the dollar, unchanged from Friday's record closing low. The Indian unit traded in a very tight range of just 3 paise throughout the day. 

A fall in the offshore Chinese yuan and other Asian currencies weighed on the rupee. The offshore Chinese yuan fell 0.2% against the dollar, after China's finance ministry on Saturday unveiled a fiscal stimulus package to support the country's sluggish economy. However, the ministry did not disclose the size of the new measures. Other Asian currencies fell between 0.1-0.5%, with the South Korean won being the worst performer.

The rupee opened at 84.0525 a dollar on Monday after trading at around 84.08 a dollar in the offshore non-deliverable forwards market a few minutes before, as banks likely sold the greenback on behalf of the RBI to prevent the Indian unit from hitting record lows at open, dealers said.  

However, as soon as the market opened, the rupee hit a record low of 84.0750 against the dollar as state-owned banks purchased the greenback on behalf of importers. Importers rushed to buy dollars in anticipation of a further fall in the rupee, which weighed on the Indian unit. "Few payments are lined in for India with respect to gold imports and few more, so the requirement for dollars is higher," a dealer at a private bank said. 

Further, foreign banks bought the greenback, likely on behalf of foreign portfolio investors looking to withdraw funds from domestic equities, which also weighed on the Indian unit, dealers said. Foreign portfolio investors have been consistently pulling out funds from domestic markets this month, exerting pressure on the Indian currency. So far in October, FPIs have net withdrawn almost $6.5 billion worth of funds from Indian markets.

Volume in the currency market remained low as the US bond markets were shut Monday. The Indian currency also came under pressure, tracking a surge in the dollar index. The dollar index rose as expectations of a steep interest rate cut by the US Federal Reserve this year reduced. Currently, traders are pricing in an 86.5% probability of a 25-basis-point rate cut by the Fed next month, and a 13.5% probability of the US central bank maintaining status quo in rates, according to the latest CME Fedwatch tool. 

At 1530 IST, the dollar index, which measures the strength of the dollar against six major currencies, was 103.07, compared to 102.92 on Friday and 102.88 on Thursday.

However, the central bank likely persistently sold the greenback at around 84.07 a dollar, which prevented the Indian unit from depreciating sharply, dealers said. "They (RBI) have been present around these levels. I think rupee will go down gradually," said a dealer at a private bank. 

Further, the Indian unit was also aided by banks' dollar sales likely on behalf of exporters, who were actively selling to take advantage of the relatively higher dollar/rupee levels, dealers said. "The rupee is expected to fall further in the short term and the RBI is offering banks to sell (dollars) at this level, but they are resistant as they expect the rupee to depreciate further to 84.10 or 84.15 a dollar," a dealer at another private bank said. 

FORWARDS

The premium on the one-year dollar/rupee forward contract ended flat as traders lacked significant cues to place large bets, dealers said. Volumes were also low Monday owing to a partial market closure in the US, they said. While the US stock market is open, the US bond market is closed. Premiums on forwards of a currency pair are reflective of the interest rate differential between the two countries. "There is not much movement in forwards. It's all still," said a dealer at a state-owned bank. "Levels are consolidating."

Market participants were waiting for the release of more economic data for further cues on the quantum of rate cut by the US Federal Reserve at its next meeting in November, dealers said. Traders now await Thursday's US retail sales and jobless claims data along with the European Central Bank's policy review. The ECB is likely to cut its deposit rate by 25 bps to 3.25% on Thursday, as per a poll by Reuters, followed by another 25 bps cut in December.

At 1530 IST, the premium on the one-year exact-period dollar/rupee forward contract was 185.88 paise, against 185.79 paise Friday. On an annualised basis, the premium was at 2.21%, unchanged against the previous close. 

OUTLOOK

On Tuesday, the rupee will take cues from movement in the dollar index and crude oil prices. Traders await a speech by Federal Reserve Governor Christopher Waller later Monday.

Traders will also keep a close watch on geopolitical developments in West Asia, dealers said. "The US-Iran developments will be crucial now, (as) this will have an impact on the crude oil prices in the coming weeks," a dealer at a private bank said.

Dealers expect the RBI to continue selling dollars to keep the Indian unit from falling sharply. During the day, the rupee is seen in a range of 84.00-84.15 a dollar, with strong technical support pegged at 84.10.

India Rupee - World FX: Australian dlr falls 0.4% post weak China econ data

MUMBAI – The Australian dollar was down 0.4% against the dollar on Monday after multiple weak economic data points from China. Data released on Sunday showed that China's consumer inflation dropped unexpectedly in September, while producer price deflation deepened, increasing pressure on the government to roll out more stimulus measures to boost the sluggish economy. The New Zealand dollar too was down 0.4% against the dollar. Both currencies track developments in China due to their close bilateral trade relations with the country. 

The dollar index strengthened owing to reduced bets of further large rate cuts by the US Federal Reserve at its remaining meetings this year. Currently, traders are pricing in an 89.5% probability of a 25-basis-point rate cut by the Fed next month, and a 10.5% chance of the central bank maintaining the status quo, according to the CME FedWatch tool. At 1502 IST, the dollar index, which measures the strength of the dollar against six major currencies, was at 102.99, compared to 102.92 on Friday and 102.88 on Thursday.

Data released on Friday showed the US producer price index for final demand was unchanged in September, against a Reuters forecast of a gain of 0.1%. It followed an unrevised 0.2% increase in August. In the 12 months through September, the PPI increased 1.8%, against the estimate of 1.6%.

The euro was down 0.1% against the dollar, tracking a rise in the dollar index. The pound sterling was down 0.1% against the greenback ahead of key UK unemployment data, due Tuesday, as traders expect the figures to give further cues on the interest rate trajectory of the Bank of England. 

Financial markets in Japan are shut on account of Japan Health and Sports Day, and the Canadian financial market are shut on account of Thanksgiving Day. (Gowri Lakshmi)

 India Rupee: Hits record low on FPI outflows; RBI's likely dollar sales aid

NEW DELHI – The rupee hit a record low of 84.0750 a dollar on Monday as foreign banks bought the greenback, likely on behalf of foreign portfolio investors looking to withdraw funds from domestic equities, dealers said. However, state-owned banks sold dollars, likely on behalf of the Reserve Bank of India, which prevented the Indian unit from depreciating sharply, they said. 

The central bank likely sold the greenback around 84.07 a dollar, which supported the Indian unit, according to dealers. "They (RBI) are holding the levels. 84.10 (a dollar) is the next resistance (for dollar/rupee) it seems," said a dealer at a private bank. The Indian unit has moved in a range of only 3 paise so far during the day. 

Market participants expect the RBI to continue intervening through dollar sales throughout the day and keep the Indian unit around the current levels. They see strong technical support for the rupee at 84.10 a dollar.

FPIs have been consistently pulling out funds from domestic markets this month, exerting pressure on the Indian currency. So far in October, FPIs have net withdrawn almost $6.5 billion worth of funds from Indian markets. "There are good bids (buying of dollar) in the market," said a dealer at another private bank. "Levels (rupee) may have to come down eventually."

Further, weakness in offshore Chinese yuan also weighed on the Indian unit, dealers said. The Chinese currency fell against the US unit after data released on Sunday showed China's consumer inflation unexpectedly eased in September and producer price deflation worsened. For the rest of the day, the rupee is seen in the range of 84.00-84.15 against the dollar, dealers said. (Pratiksha)

 India Rupee: Touches record low; RBI's likely dollar sales in NDF limit fall

MUMBAI – The rupee touched a record low of 84.0725 against the dollar on Monday. However, state-owned banks sold the greenback likely on behalf of the Reserve Bank of India in the offshore non-deliverable forwards market to prevent further fall, dealers said. The rupee came under pressure due to strengthening of the dollar index, they said.

"The rupee will mostly be in the range, but can fall as low as 84.10 or 84.08," a dealer at a state-owned bank said. The rupee traded around 84.08 a dollar in the offshore market 10 minutes prior to opening on Monday. The Indian currency opened at 84.0525 against the dollar. With the local unit breaching the psychologically crucial level of 84 per dollar, dealers expect the central bank to actively intervene in both the NDF and the domestic spot market by selling dollars to curb any sudden fall in the rupee, dealers said. 

The rupee came under pressure as soon as the market opened, tracking a surge in the dollar index, as expectations of a steep interest rate cut by the US Fed in the coming policies reduced. At 0950 IST, the dollar index, which measures the strength of the dollar against six major currencies, was 103.03, compared to 102.92 on Friday and 102.88 on Thursday. As of today, traders priced in an 86.8% probability of a 25-basis-point rate cut by the Fed in November, and a 13.2% probability of the Fed maintaining status quo, according to the CME Fedwatch Tool. 

Data released on Friday showed the US producer price index rose 1.8% in September annually, against an estimate of 1.6%. Compared to the previous month, the index remained unchanged in September. Traders now await a speech by Fed governor Christopher Waller later Monday.  

A fall in Asian currencies also weighed on the Indian unit, with the Chinese yuan falling 0.1% against the dollar. However, dealers expect exporters to actively sell dollars to take advantage of the relatively higher dollar/rupee levels, which is likely to limit the fall in the rupee. "We expect exporters to be active now and aggressive in the coming weeks as the rupee may likely have an upward movement," a dealer at a private bank said. 

For the rest of the day, the rupee is seen in the range of 84.00-84.15 against the dollar, dealers said. They see strong technical support for the Indian currency at 84.10 a dollar. (Gowri Lakshmi)

India Rupee - Asia FX: Most down as dollar index strengthens, yuan falls

MUMBAI – Most Asian currencies traded lower against the dollar, as the dollar index strengthened on waning expectations of further large rate cuts by the US Federal Reserve at its remaining meetings this year. Weakness in the offshore Chinese yuan also weighed on the Asian units. 

Recent economic data in the US and comments from Fed officials have led to traders now pricing in an 86.8% probability of a 25-basis-point rate cut by the Fed next month, while they see a 13.2% probability for the Fed to keep interest rates steady.

Data on Friday showed the US producer price index for final demand was unchanged in September, against the forecast of a gain of 0.1%, according to economists polled by Reuters. At 0838 IST, the dollar index, which measures the strength of the dollar against six major currencies, was 103.03, compared to the previous close of 102.92 on Friday and 102.88 on Thursday. Tracking a surge in the dollar index, the South Korean was down 0.6% against the greenback.

The Chinese yuan was down 0.2% against the greenback after data on Sunday showed that China's consumer inflation dropped unexpectedly in September, while producer price deflation deepened. The yuan also fell as China's finance ministry on Saturday unveiled a fiscal stimulus package to support the sluggish economy and meet the government's growth target, but did not disclose the size of the new measures.

The Thai baht was down 0.4% against the dollar ahead of the monetary policy meeting of the Bank of Thailand on Wednesday. The Bank of Thailand is expected to maintain the status quo and keep its benchmark interest rate at 2.50% despite a recent rise in inflation, according to a Reuters poll. However, the central bank is in a tussle with the government, which has long been pushing for a rate cut. 

The Philippines peso and the Indonesian rupiah were down 0.2% each against the US unit. However, the losses were limited due to gains in domestic equities. The Philippines' PSEi was up 0.8%, while Indonesia's Jakarta Composite Index was up 0.6% at 0930 IST.  (Gowri Lakshmi)

India Rupee: Expected range for rupee - Oct 14

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 Taima Banerjee

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