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Informist, Friday, Oct. 25, 2024

MUMBAI – The rupee ended steady against the dollar on Friday as state-owned banks persistently sold dollars, likely on behalf of the Reserve Bank of India. This ensured the domestic unit did not settle at a fresh closing low despite continued dollar purchases by foreign banks. Foreign banks bought dollars on behalf of foreign institutional investors who exited Indian equities, dealers said.

The rupee settled at 84.0800 a dollar on Friday. "There were mostly foreign banks, but selling from the central bank was seen," a dealer with a state-owned bank said. "We expect it to break this level (84.08 a dollar), if our equities remain down."

The local unit opened steady at 84.07 a dollar Friday. However, it later fell to a record low of 84.0850 a dollar. The rupee moved in a tight range of just under 3 paise during the day. Other Asian currencies fell 0.1-0.7% against the dollar, with the Philippines peso being the worst performer. Despite hitting a lifetime low, the rupee was the best performing currency among its Asian peers Friday. 

As soon as the domestic spot market opened, importers rushed to purchase the greenback, wary of further fall in the rupee, dealers said. Less than an hour after opening, foreign banks started purchasing dollars on behalf of overseas investors who were looking to withdraw funds from the domestic equities market, which weighed on the rupee heavily, dealers said. 

So far in October, foreign institutional investors have sold $9.6 billion, with over $8.8 billion outflows seen from equities. On Friday, both domestic benchmark indices ended in the red, with the Nifty 50 and BSE Sensex closing lower by 0.9% and 0.8%, respectively. "We can expect outflows from the Indian equities market in the coming weeks as well. The rupee will be under a lot of pressure given the rise in the dollar index and heightened geopolitical tension," a dealer at a private bank said. 

The dollar index eased slightly from the highs hit on Wednesday. However, the fall was limited as the US weekly jobless claims data, which was released Thursday, showed that the number of individuals applying for unemployment benefits fell to 227,000, lower than the market estimate of 242,000 in a Reuters poll. Moreover, the US flash composite purchasing managers' index climbed to 54.3 in October, compared to the final reading of 54.0 in September. A reading above 50 indicates expansion of activity in the sector.

At 1530 IST, the dollar index, which measures the strength of the greenback against six major currencies, was at 104.07, compared with the close of 104.02 on Thursday and 104.42 on Wednesday. 

The rupee also came under pressure from oil marketing companies, who purchased the greenback as crude oil prices extended their gains from Thursday. Traders remained cautious ahead of another round of Gaza ceasefire talks likely in the upcoming weeks. At 1530 IST, the December Brent Crude contract on the Intercontinental Exchange was at $74.94 per barrel, compared to $74.38 on Thursday, and $74.96 a barrel.

However, when the rupee fell to the key level of 84.08, some exporters were also seen in the market selling dollars to take advantage of a relatively higher dollar/rupee level, which supported the rupee, dealers said. After market hours, the rupee fell further to its lifetime low at 84.0850. "The rates are restricted at 84.0825-84.0900 for the rupee. The central bank may not let it fall below the psychologically crucial level of 84.10 easily. But gradually in the near future, we can expect the rupee to fall to 84.20 (a dollar)," a dealer at a state-owned bank said. 

Market participants keenly await the final US PMI figures due next week. They will also closely watch the monetary policy outcome of the Bank of Japan, due Oct.31.

FORWARDS

The premium on the one-year dollar/rupee forward contract ended steady Friday as some banks sold dollars for forward delivery, which offset the upward push received from a fall in the benchmark 10-year US Treasury yield, dealers said.

A fall in the yield on the benchmark 10-year US Treasury note supported the one-year dollar/rupee forward premium. The US benchmark yield fell as market participants assessed the outcome of the US presidential elections. 

Dealers said the one-year dollar/rupee forward premium may rise as expectations of an early rate cut in India were pushed back. On the other hand, the US is likely to go for a 25-basis-point cut in November and another 25-bps cut in December. This is expected to increase the interest rate differential between the US and India, driving premiums higher.

At 1530 IST, the premium on the one-year exact-period dollar/rupee forward contract was 190.42 paise, against 190.81 paise on Thursday. On an annualised basis, the premium was 2.26% against 2.27% on Thursday.

OUTLOOK

The market will be shut Saturday. On Monday, the rupee will take cues from the movement in the dollar index and crude oil prices over the weekend. 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, they said.

Further fall in domestic equities is expected to weigh on the rupee, with the likelihood of foreign portfolio investors continuing exiting the market, 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 dn as Japan core inflation below BoJ's 2% target

MUMBAI – The Japanese yen was down 0.1% against the dollar as data released Friday showed Tokyo's core inflation dipped below the Bank of Japan's target of 2%. The Tokyo core consumer price index rose 1.8% on year in October, down from 2% in September. The Tokyo inflation figure is an important data point that the central bank will scrutinise next week at its monetary policy meeting. The Bank of Japan is scheduled to meet on Oct. 30.

The New Zealand dollar was down 0.3% as the consumer confidence index declined to 91.2 in October from 95.1 in September. The Australian dollar was down 0.2% against the US currency.

The Euro traded flat against the dollar as traders reacted to the IFO business climate report from Germany. Europe's largest economy's business climate report rose to 86.5 in October from 85.4 in September. The pound sterling was up 0.1% against the US dollar.

The dollar index eased slightly from the highs it hit on Wednesday. At 1507 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was 104.05, compared with the close of 104.02 on Thursday and 104.42 on Wednesday. 

The fall in the dollar index was limited as data on Thursday showed that the US flash composite purchasing managers' index was at 54.3 for October, compared to the final reading of 54.0 for September. A reading above 50 indicates expansion of activity in the sector. 

Further, the US weekly jobless claims data released on Thursday showed that the number of individuals applying for unemployment benefits fell to 227,000, lower than the estimate of 242,000 in a Reuters poll. (Gowri Lakshmi)

India Rupee: In thin band; bks' dlr sales likely for RBI offset FPI outflows

MUMBAI – The rupee remained in a thin band as public sector banks persistently sold dollars, likely on behalf of the Reserve Bank of India, which offset the impact of foreign banks purchasing the greenback, dealers said. They said foreign banks bought dollars on behalf of foreign institutional investors who withdrew funds from Indian equities. Domestic equities slumped, with both the Nifty 50 and BSE Sensex down 1.0%, at 1323 IST. It weighed on the rupee, dealers said.

So far in October, foreign institutional investors have sold $9.6 billion, with over $8.9 billion from equities. At 1314 IST, both domestic benchmark indices, the Nifty 50 and BSE Sensex were down 1.12% and 0.92%, respectively. 

"The rupee isn't moving much today though there is pressure from both sides (buying and selling). The rupee will be in this 2 paisa range for the day as the central bank won't let the rupee break the 84.08 level," a dealer at a private bank said.

Further, the rupee came under pressure as importers purchased the greenback in anticipation of a further fall in the rupee as the local currency touched the record low of 84.0800 earlier Friday. Some banks sold the greenback on behalf of exporters upon touching the day's low to take advantage of a higher dollar/rupee level, which supported the Indian currency, dealers said.

The rupee got a sigh of relief due to an ease in the dollar index following a rise in the euro and Japanese yen on Thursday. However, the fall in the dollar index was limited as data revealed on Thursday showed that the US flash composite purchasing managers' index climbed to 54.3 in October, compared with the final reading of 54.0 in September. A reading above 50 indicates expansion of activity in the sector.

At 1335 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was 104.04, compared with the close of 104.02 on Thursday and 104.42 on Wednesday.

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: Technical Levels for rupee - Oct 25

MUMBAI – At 0900 IST, the rupee was at 84.0700 a dollar, from its previous close of 84.0775. At 1106 IST, the rupee was at 84.0675 per dollar. Following are the key support and resistance levels for the rupee as provided by leading banks and brokerages:

(Gowri Lakshmi)

India Rupee: Touches record low; RBI's likely dlr sales avert further fall

MUMBAI – The rupee touched the record low of 84.0800 it hit on Tuesday, as foreign banks purchased dollars on behalf of overseas investors looking to withdraw funds from domestic equities, dealers said. They said some state-owned banks were also selling the greenback, likely on behalf of the Reserve Bank of India, in the domestic spot market, which prevented the rupee from breaching the key level at 84.08.

The rupee was also weighed by excessive dollar demand from importers who bought the greenback in anticipation of further fall in the rupee. "There is buying pressure (of dollars), some nats (public-sector banks) maybe selling, that must have made the market steady. Continued pressure on the rupee is expected for some time now but the central bank is selling around 84.08 a dollar," a dealer at a state-owned bank said.

The rupee was weighed by a fall in equities as investors continued to withdraw funds from the domestic equity market. At 1005 IST, both domestic benchmark indices, the Nifty 50 and BSE Sensex were down 0.58% and 0.43%, respectively. 

Though the dollar index fell slightly, it is still hovering around its high levels, dealers said. On Thursday, data revealed that the US flash composite purchasing managers' index climbed in October. It limited the fall in the dollar index.

Currently, the probability of the US Fed lowering interest rates by 25 basis points rose to 97.0% from 95.0% Thursday. Traders price in a 3% probability of the Fed maintaining the status quo. At 0959 IST, the dollar index, which measures the strength of the dollar against six major currencies, was 104.07, compared to the close of 103.02 on Thursday and 104.42 on Wednesday.

However, some banks sold the greenback on behalf of some exporters, who wanted to take advantage of the higher dollar/rupee levels, as soon as the rupee touched the lifetime low of 84.08.

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; South Korean won falls on economic worry

NEW DELHI – Most Asian currencies were down, with the Philippines peso taking the biggest hit, falling by 0.6% against the dollar. A fall in the Philippines' stock index, PSEi Index, weighed on the currency. The index was down 0.1% 

Further, the South Korean won fell 0.5% against the greenback, as the country's finance minister Friday warned of uncertainties around the nation's exports and flagged risks to its economic growth. This was after South Korea reported lower-than-expected GDP numbers for September, with a fall in exports.

The Indonesian rupiah was down 0.3% against the greenback. The Malaysian ringgit was steady against the dollar, amid a lack of significant triggers to drive the market. The Taiwan dollar was also steady against the greenback.

The dollar index eased Friday, after having hit a three-month high on Wednesday. The dollar index was also weighed down by a rise in the euro and Japanese yen on Thursday. The yen recovered slightly after coming under pressure and falling below the crucial level of 153-a-dollar earlier this week. The euro and yen carry a weight of 57.6% and 13.6%, respectively, in the dollar index.

However, the fall in the index was limited as data showed that the number of people in the US who applied for unemployment benefits fell to 227,000, lower than the market estimate of 242,000 in a Reuters poll. At 1008 IST, the dollar index, which measures the strength of the dollar against six major currencies, was 104.06, compared with the close of 104.02 on Thursday and 104.42 on Wednesday.  (Sourabh Kumar)

India Rupee: Expected range for rupee - Oct 25

NEW DELHI – Following are the expected support and resistance levels for the rupee on Friday, as forecast by leading banks and brokerages in an Informist poll: 

(Sourabh Kumar)

End

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

Edited by Tanima Banerjee and Avishek Dutta

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