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Informist, Thursday, Oct. 17, 2024

By Gowri Lakshmi

MUMBAI – The rupee ended slightly lower against the dollar Thursday owing to dollar purchases on behalf of importers and a strong dollar index, dealers said. However, the fall in the Indian unit was limited by banks' dollar sales on behalf of overseas investors looking to invest in the initial public offering of Hyundai Motor India Ltd., they said.

"The market is very dull today. There are importers purchasing dollars, though not aggressively, which is pulling the rupee down. Exporters have limited their selling, they are not hedging as most of them booked their profits immediately last week when the rupee breached the 84 (per dollar) level," a dealer at a state-owned bank said.

After moving in a narrow range of 8 paise through the day, the rupee settled at 84.0675 against the dollar, against 83.9950 a dollar Wednesday. Other Asian currencies fell 0.1%-0.5% against the dollar, with the South Korean won being the worst performer.

Even as the dollar index surged, the rupee opened steady against the greenback as foreign banks sold dollars, probably on behalf of overseas investors looking to invest in the public issue of Hyundai Motor India Ltd., which opened for subscription Tuesday and closed Thursday, dealers said.

The dollar index surged to an over-two-month high as the expectation of a large-sized rate cut by the US Federal Reserve in its upcoming meetings decreased. Market participants are now waiting for the US retail sales and weekly jobless claims data, both due later in the day, for more cues to the Fed's interest rate decisions.

Currently, traders price in a 92.1% probability of the Fed lowering its interest rate by 25 basis points at its November policy meeting, and a 7.9% probability of the central bank maintaining the status quo, according to the CME FedWatch tool. At 1530 IST, the dollar index, which measures the strength of the dollar against six major currencies, was 103.52, compared to Wednesday's close of 103.52 and 103.23 on Tuesday. The index rose to an over-two-month high of 103.66 earlier in the day.

The rupee was also weighed down by banks purchasing dollars on behalf of oil and other importers who bought the greenback in anticipation of a further fall in the rupee. Oil importers also purchased the greenback, noting the relatively lower crude oil prices, dealers said. At 1530 IST, the December Brent Crude contract on the Intercontinental Exchange was at $74.25 per barrel, compared to $74.22 per barrel Wednesday and $74.25 per barrel Tuesday. Prices have fallen and consolidated after settling at $77.46 a barrel on Monday.

Some foreign banks purchased the dollar on behalf of foreign portfolio investors looking to withdraw funds from the Indian stock market. This also weighed on the rupee, dealers said. So far in October, FPIs have net withdrawn $8.38 billion from the Indian markets. On Thursday, the BSE Sensex and Nifty 50 ended 0.6% and 0.9% lower, respectively.

FORWARDS

The premium on the one-year dollar/rupee forward contract ended steady Thursday as traders avoided placing large bets ahead of the release of key economic data in the US, dealers said. Market participants await the release of the weekly unemployment data and retail sales data in the US, due Thursday, for more cues on the Fed's rate-easing cycle. Premiums on forwards of a currency pair are reflective of the interest rate differential between two countries. 

Earlier in the day, Informist reported, citing dealers, that traders in the dollar/rupee forwards market were caught off-guard when they realised the much-awaited public issue of Hyundai Motor India Ltd. was drawing a lukewarm response, causing heightened volatility in the near-term segment. 

At 1530 IST, the premium on the one-year exact-period dollar/rupee forward contract was 186.05 paise, against 186.47 paise Wednesday. On an annualised basis, the premium was at 2.21%, unchanged from the previous close. 

OUTLOOK

On Friday, the rupee will take cues from the movement in the dollar index after the release of the US retail sales and weekly jobless claims data due later Thursday, dealers said. The data are expected to give traders cues on the Fed's interest rate-cut trajectory.

The local unit will also take cues from movement in crude oil prices, they said. Market participants also await the monetary policy outcome of the European Central Bank, due Thursday. The ECB is expected to lower the key deposit rate by 25 bps to 3.25%, as per a poll by Reuters.

Dealers expect the Reserve Bank of India to intervene in both the non-deliverable forwards market and the domestic spot market through dollar sales to keep the Indian unit from falling sharply, dealers said. "RBI has been protecting the level of 84.07 for the past four days and would be expected to continue doing the same," Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors LLP, said. "Rupee is expected to be in a range of 83.90 to 84.15 tomorrow (Friday). Hyundai outflow is expected in the next few days as the money will be passed on to the parent in South Korea."

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 dollar up 0.2% on strong employment data

MUMBAI – The Australian dollar was up 0.2% against the US dollar on Thursday as data released earlier in the day showed total employment in Australia rose by 64,100 in September, higher than a Reuters poll estimate of 25,000. The unemployment rate was steady at 4.1% in September, lower than the forecast of 4.2%. In line with the rise in the Australian unit, the New Zealand dollar also rose and was up 0.1% against the greenback. Any movement in the Australian currency directly influences the New Zealand dollar due to their close bilateral-trade relations.

The pound sterling was up 0.1% against the dollar. The gains were capped as the dollar index surged to over a two-month high. The dollar index rose as the probability of a large-sized rate cut by the US Federal Reserve decreased. Market participants are now waiting for the US retail sales, industrial production, and weekly jobless claims data, all due later in the day, for more cues on the Fed's interest rate decision going ahead.

Currently, traders have priced in a 92.1% probability of the Fed lowering its interest rate by 25 basis points at its policy meeting in November, and a 7.9% probability of the central bank maintaining status quo, according to the CME FedWatch tool. At 1530 IST, the dollar index, which measures the strength of the dollar against six major currencies, was 103.53, compared to Wednesday's close of 103.52 and 103.23 on Tuesday.  The index rose to an over-two-month high of 103.66 earlier in the day.

The Canadian dollar was down 0.2% against the US dollar as Canada's manufacturing sales declined 1.3% in August, the most since January 2022. The fall was largely due to a decline in sales of primary metals, petroleum and coal product sub-sectors, reports said.

The Japanese yen was down 0.1% against the greenback as the country's exports fell for the first time in 10 months due to muted demand from China and the US. Japan's exports fell 1.7% in September against expectations of a rise of 0.5%. Further, the country's imports rose 2.1% in September. The data may influence Bank of Japan's decision to keep the door open to raise interest rates in its upcoming policy meeting this year. Bank of Japan is scheduled to meet on Oct. 30-31.

The euro was largely unchanged against the dollar as market participants remain cautious ahead of the monetary policy outcome of the European Central Bank later in the day. It is expected to lower interest rates by 25 bps to 3.25%.  (Gowri Lakshmi)

India Rupee: Tad down on importers' dollar buys; IPO-linked FX inflows limit fall

MUMBAI – The rupee was down on banks' dollar purchases, possibly on behalf of importers wary of further depreciation in the domestic unit, dealers said. Some foreign fund inflows Thursday in currently open initial public offerings limited the fall in the domestic unit, dealers said.

"Chances are the rupee is expected to weaken further in the short term as major outflows are seen, so importers are purchasing now for profit-booking," a dealer at a state-owned bank said.

The rupee also came under downward pressure as the dollar index rose to its high level in over two months at 103.65 Thursday. The dollar index was strengthening as the probability of a large-sized rate cut by the US Federal Reserve decreased. Market participants are now waiting for the US retail sales, industrial production, and weekly jobless claims data, all due later in the day, to get more cues to the Fed's interest rate decisions.

Currently, traders price in a 92.1% probability of the Fed lowering its interest rate by 25 basis points at its November policy meeting, and a 7.9% probability of the central bank maintaining status quo, according to the CME FedWatch tool. At 1427 IST, the dollar index, which measures the strength of the dollar against six major currencies, was 103.64, compared to Wednesday's close of 103.52 and 103.23 on Tuesday.

A fall in the Chinese yuan also weighed on the Indian currency, dealers said. The Chinese yuan fell 0.1% against the greenback as investors were unimpressed though China's government announced a fresh set of economic stimulus measures to lift its dwindling housing market earlier Thursday. A fall in domestic equities also weighed on the Indian unit. At 1427, the Nifty 50 and the BSE Sensex were down 0.8% and 0.6%, respectively. 

Traders now await the monetary policy decision by the European Central Bank due after Indian market hours, where the ECB is expected to lower its deposit rate by 25 basis points. For the rest of the day, the rupee is seen in the range of 84.00-84.10 against the dollar, dealers said. They see strong technical support for the Indian currency at 84.10 a dollar.  (Gowri Lakshmi)

India Rupee: Technical Levels for rupee - Oct 17

MUMBAI – At 0900 IST, the rupee was at 84.0100 a dollar, from its previous close of 83.9950. At 1126 IST, the rupee was at 84.0050 per dollar. The following are key support and resistance levels for the rupee as provided by leading banks and brokerages:

(Gowri Lakshmi)

India Rupee - Asia FX: Most down as dollar index surges to over 2-month high

MUMBAI – Most Asian currencies traded lower against the dollar as the dollar index surged to an over two-month high on Wednesday as traders remained cautious ahead of key economic data from the US. A rate cut by multiple central banks in Asia also weighed on their currencies. 

The US retail sales, industrial production, and weekly jobless claims data are lined up later in the day. Traders will closely analyse the data points to find more cues on the interest rate decisions by the US Federal Reserve at its upcoming policy meeting. Currently, traders have priced in a 92.2% probability of a 25-basis-point rate cut by the US Fed at their November policy meeting, and a 7.8% chance of the Fed maintaining the status quo, according to the CME FedWatch tool.

At 1004 IST, the dollar index, which measures the strength of the dollar against six major currencies, was 103.57, compared with 103.52 on Wednesday and 103.23 on Tuesday. The dollar index surged to an over 2-month high of 103.61 on Wednesday. The Malaysian ringgit was down 0.3% against the greenback.

The Indonesian rupiah was down 0.2% against the dollar. On Wednesday, Bank Indonesia kept its benchmark policy rate unchanged to focus on stability of its currency, reports said. The central bank held its seven-day reverse-repo rate unchanged at 6.00%, in line with market expectations. "The focus of short-term monetary policy is on the stability of the rupiah exchange rate due to increasing uncertainty in global financial markets," Bank Indonesia Governor Perry Warjiyo said at a press conference. 

The Philippines peso was up 0.1% against the dollar due to gains in the domestic stock market. However, gains were capped as the central bank slashed its benchmark rates by 25 bps on Wednesday. This is the second time Bangko Sentral ng Pilipinas eased its monetary policy this year and has left the door open for further rate cuts. 

The Thai baht was down 0.1% against the dollar after the central bank of Thailand unexpectedly cut its interest rate. The Thai central bank slashed its benchmark rate by 25 bps to 2.25% on Wednesday, the first instance of a rate cut by the central bank since 2020. The Thai government has long been calling for a rate cut to boost the sluggish economy. Further, the headline inflation is projected at 0.5% in 2024, Secretary of the policy committee Sakkapop Panyanukul said. 

On Thursday, the government of China announced new measures to boost their slowing property sector. The Housing and Urban-Rural Development Minister Ni Hong said that the country will expand the list of housing projects and the central bank will increase the lending for such projects to 4 trillion yuan. However, due to lack of clarity regarding the measures, investors were underwhlemed. Following this, the Chinese yuan was 0.1% down against the greenback, which also weighed on other Asian currencies.  (Gowri Lakshmi)

India Rupee: Steady as exporters' dollar sales offset strong dollar index

MUMBAI – The rupee was steady against the dollar on Thursday as some banks sold dollars, likely on behalf of exporters, which offset the impact of a strong dollar index, dealers said. Some foreign fund inflows into the domestic equities market also supported the rupee, they said.

"Currently, there is some selling in the market," a dealer with a private bank said. "We expect some IPO flows as well later in the day." Exporters sold dollars anticipating a rise in the rupee later in the day due to foreign fund inflows into the open initial public offerings, dealers said.

The Indian rupee was aided by foreign banks' dollar sales on behalf of overseas investors looking to invest in the IPO of Hyundai Motor India Ltd., which opened for subscription Tuesday and will close Thursday, dealers said.

The dollar index surged to an over two-month high of 103.61 on Wednesday, ahead of key economic data from the US. US retail sales, industrial production, and weekly jobless claims data are due later in the day. Traders will closely watch the data points to find more cues on the interest rate decisions by the US Federal Reserve at its upcoming meetings.  

Currently, traders have priced in a 92.2% probability of a 25-basis-point rate cut by the US Fed at its November policy meeting, and a 7.8% chance of the Fed maintaining status quo, according to the CME FedWatch tool. At 0925 IST, the dollar index, which measures the strength of the dollar against six major currencies, was 103.60, compared to 103.52 on Wednesday and 103.23 on Tuesday. 

"Broadly" weak crude oil prices supported the rupee, dealers said. Prices have inched lower this week after easing supply concerns and bleak demand growth. At 0951 IST, the December Brent crude contract on the Intercontinental Exchange was $74.38 per barrel, compared to $74.22 per barrel on Wednesday and $74.25 per barrel on Tuesday. 

For the rest of the day, the rupee is seen in the range of 83.95-84.10 against the dollar, dealers said. They see strong technical support for the Indian currency at 84.10 a dollar.  (Gowri Lakshmi)

India Rupee: Expected range for rupee - Oct 17

MUMBAI – Following are the expected support and resistance levels for the rupee on Wednesday, 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 Rajeev Pai

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