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Informist, Thursday, Oct. 24, 2024

By Gowri Lakshmi

MUMBAI – The rupee ended steady against the dollar on Thursday amid lacklustre volumes, as traders remained cautious before placing large bets ahead of the US purchasing managers' index due after Indian market hours Thursday, dealers said. They said oil marketing companies purchased dollars in anticipation that oil prices would rise further. Crude oil prices rose 1% on Thursday due to heightened geopolitical tension in West Asia, which weighed on the rupee. 

"It was during the last hour or so, as we saw yesterday (Wednesday), that the rupee came under pressure, primarily because of oil companies' demand (for dollars)," a dealer with a state-owned bank said.

After trading in a tight range of just under 3 paise throughout the day, the Indian currency settled at 84.0775, after closing at a record low of 84.0800 a dollar on Wednesday. Some exporters' dollar sales aided the rupee from falling further. Some dealers also speculated that some public sector banks sold the greenback, likely on behalf of the Reserve Bank of India, which has been vehemently protecting the rupee from falling past the key level of 84.0800 a dollar. 

A rise in the Asian currencies also supported the rupee. Asian currencies rose 0.1-0.5% against the dollar, with the Thai baht being the best performer. Paring losses from the previous session, the Chinese yuan was up 0.2% against the dollar, which provided support to the Indian unit, dealers said.

The rupee started the day steady at 84.0600 a dollar as market participants remained cautious ahead of the US PMI data due later in the day. However, the rupee came under pressure from a strong dollar index. After surging to a fresh 3-month high on Wednesday, the dollar index was hovering near that level early Thursday.

The dollar index was firm as the probability of the US Federal Reserve going for an aggressive rate cut diminished. Currently, the odds of a 25-basis-point rate cut by the Fed at its November policy meeting are seen at 93.1% while the probability of the central bank maintaining the status quo is 6.9%, according to the CME FedWatch tool. 

The dollar index also received support from rising expectations of the republican candidate Donald Trump winning the US presidential elections in November. At 1530 IST, the dollar index, which measures the strength of the dollar against six major currencies, was 104.28, compared with the previous close of 104.42 on Wednesday and 104.07 on Tuesday.

Although the trade volume remained subdued in the Indian currency market, importers purchased dollars in anticipation of a further fall in the rupee, which weighed on the local unit, dealers said.

The Indian currency got support from banks who sold the greenback, on behalf of some exporters who wanted to take advantage of the relatively higher dollar/rupee levels, dealers said. Dealers also speculated that some public-sector banks sold dollars, likely on behalf of the Reserve Bank of India, which prevented the rupee from falling sharply.

"Exporters weren't aggressively selling today. They are waiting for the rupee to breach 84.08 a dollar. It's a hard level to break, though it touched that level in the last two days. The RBI will prevent the rupee from breaching 84.08, and will protect 84.10 (a dollar) even more," a dealer at a state-owned bank said.

Market participants will closely watch the US PMI data due later in the evening, to get more cues on the health of the US economy and to get further insights about the possible rate trajectory of the US Federal Reserve. The US October flash manufacturing PMI reading is expected to come in at 47.5 against 47.0 in September, according to a poll by Dow Jones. The services flash PMI is seen at 55.3 in October, little changed from September's 55.4.

FORWARDS

The premium on the one-year dollar/rupee forward contract ended steady Thursday as market participants remained on the sidelines ahead of the release of the US flash purchasing managers' index, due after market hours Thursday. Traders who were in the market also refrained from placing large bets, dealers said. 

A rise in the benchmark 10-year US Treasury yield on Wednesday weighed on the dollar/rupee forward premium, dealers said. Premiums on forwards of a currency pair are reflective of the interest rate differential between the two countries. 

However, with expectations of the Reserve Bank of India cutting rates being pushed further, at least for now, and the US likely to go for a 25-bps rate cut next month, as seen by the market, the interest rate differential between the US and India was seen rising, which drove the one-year dollar/rupee forward premium higher, dealers said. 

Going ahead, the one-year dollar/rupee forward premium is expected to rise as market participants' expectations about the Reserve Bank of India going for an early rate cut, probably in December, were doused, after RBI Governor Shaktikanta Das last week said that a rate cut at the current juncture would be premature and risky, dealers said.

At 1530 IST, the premium on the one-year exact-period dollar/rupee forward contract was 190.31 paise, against 190.99 paise on Wednesday. On an annualised basis, the premium was at 2.26%, similar to Wednesday's close.

OUTLOOK

On Friday, the rupee will take cues from the movement in the dollar index and crude oil prices, dealers said. Dealers expect foreign banks to purchase dollars on behalf of foreign portfolio investors, which may weigh on the rupee. Market participants await the US weekly jobless claims data alongside the PMI figures due after Indian market hours.

However, the movement in the dollar/rupee may remain contained as the RBI may continue to prevent excessive volatility through its interventions, dealers said. 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: Yen up after Japanese finance minister's comments

MUMBAI – The Japanese yen was up 0.5% against the US dollar after Japanese Finance Minister Katsunobu Kato's comments on Thursday that the government was watching the currency market carefully. Kato said the weakness in the yen was being watched with a greater sense of urgency, Dow Jones reported.

Bank of Japan Governor Kazuo Ueda's comments on Wednesday also aided the currency. Ueda said the central bank was 'still taking time' to bring inflation to the 2% target, hinting that it might hike interest rates at its upcoming meeting. The Bank of Japan's next policy meeting is on Oct. 30. Japan's flash purchasing manager's index, which showed that business activity continued to shrink in October, capped gains in the yen.

The Euro was up 0.2% against the dollar after the Eurozone composite flash purchasing managers' index rose to a two-month high of 49.7 in October from 49.6 in September. 

The rise in the Japanese yen and euro weighed on the dollar index. The euro and yen carry a weight of 57.6% and 13.6%, respectively, in the dollar index. The dollar index eased in early European trade after rising to a near three-month high of 104.57 on Wednesday. The dollar index had strengthened on Wednesday as expectations of an aggressive rate cut by the US Federal Reserve at its upcoming meeting diminished. Currently, traders see a 93.0% probability of the US Fed lowering its rates by 25 basis points and a 7.0% probability of it maintaining the status quo.

At 1512, the dollar index, which measures the strength of the dollar against six major currencies, was 104.15, compared to the previous close of 104.42 on Wednesday and 104.07 on Tuesday. Market participants are keenly awaiting the US flash PMI data, due later Thursday.

The pound sterling was up 0.3% against the greenback. The sterling rose on the expectation that the UK government will announce an increase in its spending in the budget, due on Oct. 30. However, the gains were capped after the UK PMI revealed that the country's composite index hit an 11-month low in October. 

The Australian dollar was up 0.4% against the US dollar as Australia's Judo Bank composite PMI climbed to 49.8 in October from 49.6 in September. Tracking gains in the Australian dollar, the New Zealand dollar was up 0.3%. 

The Canadian dollar rose 0.2% against the greenback on the back of a rise in crude oil prices. Crude oil is a major commodity Canada exports to the US. Crude oil prices rose 1% on Thursday due to heightened geopolitical tension in West Asia.  (Gowri Lakshmi)

India Rupee: In thin band; some exporters' dollar sales offset oil cos' buys

MUMBAI – The rupee remained in a thin band as some exporters' dollar sales offset banks' dollar purchases on behalf of oil marketing companies, dealers said. They said oil marketing companies bought the greenback, anticipating a rise in oil prices. The Brent crude rose to $76.34 a barrel Thursday, its highest level in over a week.

"Some oil buyers were seen, but largely the market has not moved," a dealer with a state-owned bank said. Dealers said some exporters sold dollars, which supported the rupee. However, they said, most of them were waiting for the rupee to fall past 84.08 a dollar, before placing large bets.

Dealers said most market participants refrained from placing large bets ahead of the US purchasing managers' index, due later Thursday, dealers said. 

"The market is very stagnant today, for the past three days its moving in thin range due to RBI intervention," a dealer at a state-owned bank said. "The rupee is heavily protected at 84.0800, though it touched the level yesterday toward the closing hours. The RBI may not let the rupee fall below 84.08 even if the dollar index strengthens further," he added. Some dealers speculated that the RBI may have sold dollars to prevent the rupee from falling sharply. 

After touching a near three-month high on Wednesday, the dollar index eased in early European trade Thursday. It had touched the high on Wednesday as traders expected the US Federal Reserve to proceed with a shallow rate cut. Currently, traders have priced in a 90.9% probability of the US Fed lowering its rates by 25 bps, while a 9.1% probability is seen for the Fed to maintain the status quo.

For the rest of the day, the rupee is seen in a range of 84.00-84.15 against the dollar, dealers said. They see immediate support for the Indian currency at 84.08 a dollar and a strong resistance at 84.10. (Gowri Lakshmi)

India Rupee: Premium steady as traders on sidelines ahead of US flash PMI

NEW DELHI – The premium on the one-year dollar/rupee forward contract was steady Thursday as market participants remained on the sidelines ahead of the release of the US flash purchasing managers' index, due after market hours Thursday. Traders who were in the market also refrained from placing large bets, dealers said.

A rise in the benchmark 10-year US Treasury yield on Wednesday weighed on the dollar/rupee forward premium, dealers said. Premiums on forwards of a currency pair are reflective of the interest rate differential between the two countries. 

"Today, like the spot, the forward market is very dull," a dealer with a private bank said. "People are waiting for today's data." The US October flash manufacturing PMI reading is expected to come in at 47.5 against 47.0 in September, according to a poll by Dow Jones. The services flash PMI is seen at 55.3 in October, little changed from September's 55.4.

Market participants await the data from the US to assess the quantum of rate cuts by the US Federal Reserve at its upcoming meetings, dealers said. As of today, Fed funds futures traders see a 90.9% chance of a 25-basis-point rate cut at the Fed's next meeting, as per CME FedWatch tool. The rest of the odds were of keeping the rates steady, with no chances seen of a 50-bps cut.

The one-year dollar/rupee forward premium is expected to rise as market participants' expectations about the Reserve Bank of India going for an early rate cut, probably in December, were doused, after RBI Governor Shaktikanta Das last week said that a rate cut at the current juncture would be premature and risky, dealers said. 

With expectations of India cutting rates being pushed further, at least for now, and the US likely to go for a 25-bps rate cut next month, as seen by the market, the interest rate differential between the US and India was seen rising, which drove the one-year dollar/rupee forward premium higher, dealers said.

At 1303 IST, the premium on the one-year exact-period dollar/rupee forward contract was 190.06 paise, against 190.99 paise on Wednesday. On an annualised basis, the premium was at 2.26%, similar to the previous close.  (Sourabh Kumar)

India Rupee: Technical Levels for rupee - Oct 24

MUMBAI - At 0900 IST, the rupee was at 84.0600 a dollar, from its previous close of 84.0800. At 1059 IST, the rupee was at 84.0650 per dollar. Following are the key support and resistance levels for the rupee as provided by leading banks and brokerages:

(Gowri Lakshmi)

India Rupee - Asia FX: Mixed before US PMI data; Indonesian rupiah rises

MUMBAI – Asian currencies traded mixed against the dollar on Thursday ahead of the US flash purchasing managers' index, due later in the day. The dollar index rose to a fresh three-month high on Wednesday, the highest rise since Jul. 30. It strengthened as investors were optimistic that the US Fed may not slash its interest rates aggressively at the upcoming policy meeting.

The South Korean won was up 0.2% against the dollar. However, gains in the currency were capped since the country's economy showed little signs of growth, data released on Thursday showed. South Korea's GDP grew 0.1% on quarter in September, with data revealing a fall in exports for the first time in two years. The GDP came lower than the expectations of the central bank, with the Bank of Korea now warning of a likely downgrade in its 2024 growth outlook.

The Indonesian rupiah was up 0.3% against the greenback following comments from a central bank official. On Wednesday, Bank Indonesia official, in a text message, said that the central bank is confident the Malaysian currency will appreciate against the dollar. However, in the short term, Indonesian rupiah may remain highly volatile.

The dollar index rose to a fresh three-month high of 104.57 on Wednesday as the expectation of a 50 basis point rate cut by the US Federal Reserve was reduced, amid positive global economic growth. Currently, traders price in a 92.5% probability of the US Fed lowering its rates by 25 bps, while a 7.5% probability is seen for the Fed to maintain the status quo.

The dollar index got a further boost as the chances of Donald Trump winning the US presidential elections increased. Further, the US dollar was boosted after the Canadian dollar fell following a half-point rate cut by the Bank of Canada. At 1027 IST, the dollar index, which measures the strength of the dollar against six major currencies, was 104.23, compared with the close of 104.42 on Wednesday, and 104.07 on Tuesday. The Malaysian ringgit traded flat against the dollar. 

The Thai baht was down 0.1% against the greenback after the country's finance minister Pichai Chunhavajira said that though Thailand's economic growth may not reach 3% in 2024, he expects the growth to be above the level next year as the government will accelerate investment. "The Thai economy is in a growth phase. Thailand is about to invest more, so it is not at risk of having its credit ratings downgraded," Chunhavajira said on Tuesday.

The Chinese yuan was up 0.3% against the dollar. Gains in the currency were limited, tracking a fall in the domestic stock market. The Philippines peso was flat against the greenback due to a slump in domestic equities, with the benchmark PSEi index down 0.8%. (Gowri Lakshmi)

India Rupee: Steady as traders avoid large bets ahead of US flash PMI

India Rupee: Steady as traders avoid large bets ahead of US flash PMI

MUMBAI – The rupee was steady against the dollar in early trade amidst low volumes as traders refrained from placing large bets ahead of the US flash purchasing managers index data, due to be released later Thursday, dealers said. 

"It is US PMI, and also the market is waiting for the rupee to break past either 08 level (84.08 a dollar) on the downside or move higher than 05 levels (84.05 a dollar), before making major moves," a dealer with a state-owned bank said.

The US October manufacturing PMI is expected to come in at 47.5 against 47.0 in September, according to a poll by Dow Jones. The services PMI is seen at 55.3 in October, little changed from September's 55.4.

Dealers said while some exporters sold dollars, most of them were waiting for the rupee to fall past 84.08 a dollar, before placing large bets. Further, importers whose constant dollar purchases kept the rupee under pressure for the past couple of days, were also not very active in early trade Thursday.

Dealers expected the Reserve Bank of India to intervene in the foreign exchange market by selling dollars Thursday, if the rupee trades near 84.08 a dollar. "I think we can see 84.09 today, if the pressure builds up (on rupee). But, the way the dollar index is strengthening, ideally the rupee should have been depreciated, if not for the central bank's intervention," said the dealer.

The dollar index strengthened and hit a fresh near-three-month high of 104.57 on Wednesday due to diminished expectations of an aggressive rate cut by the US Fed, and as the chances of Donald Trump winning the US presidential elections increased. On Thursday, the index hovered near that level. The dollar index, which measures the strength of the greenback against a basket of six major currencies, was 104.35 at 0935 IST, against Wednesday's close of 104.42, and Tuesday's close of 104.06.

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 84.08 a dollar.  (Sourabh Kumar)

India Rupee: Expected range for rupee - Oct 24

MUMBAI – Following are the expected support and resistance levels for the rupee on Thursday, 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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