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Informist, Tuesday, Oct. 29, 2024

By Sourabh Kumar

NEW DELHI – After moving in a very narrow range, exactly the same as Monday, the rupee closed steady against the dollar. Some banks sold the greenback, likely on behalf of the Reserve Bank of India, to offset pressure on the rupee due to importers' continuous dollar purchases, dealers said.

"There was no movement, and that is how it seems to be this week, or at least before the (US) election," a dealer with a state-owned bank said. The rupee moved in a range of 2 paise--between 84.06 and 84.08 a dollar. "But, practically, it is not even 2 paise, it moved barely 0.50 paise for the better part of the day," the dealer said.

The rupee settled at 84.0750 a dollar Tuesday, little changed from Monday's close of 84.0775 a dollar. Opening steady against the dollar, the Indian currency came under pressure due to importers' dollar purchases, with most of them demanding the greenback to meet their month-end payment obligations, dealers said. 

The rupee was steady the entire day, with little to no movement seen, dealers said. They said that while there was some downward pressure on the currency owing to importers' dollar purchases, the RBI's intervention through dollar sales offset even that slight impact.

Importers purchased the greenback as they feared a further rise in the dollar/rupee, dealers said. With the rupee stuck in a very narrow range and trading near its lifetime low of 84.0850 a dollar, importers feared that the currency might fall sharply, should it slip beyond 84.10 a dollar, they said.

A firm dollar index also weighed on the rupee, dealers said. While the dollar index eased slightly from the near-three-month high it hit Monday, it was still hovering near that level. The dollar index held strong ahead of the US presidential election. At 1530 IST, the index which measures the strength of the dollar against six major currencies was at 104.30, compared with 104.30 Monday and 104.32 Friday. The dollar index rose to a near-three-month high of 104.57 Monday.

"I think if Trump wins, the dollar index is going to depreciate, so that is going to relieve some pressure on the rupee," a dealer with a brokerage firm said.

In the US presidential election, scheduled for Nov. 5, most polls suggest that the leading candidates, Vice-President Kamala Harris of the Democratic Party and Donald Trump of the Republican Party, are in a race too close to call, with a 49% chance of Harris winning and a 47% chance for a Trump victory, according to a CNN poll.

A fall in the Japanese yen also supported the greenback. The yen came under pressure due to political uncertainty after the ruling party lost its majority in the far-eastern nation's poll Sunday. The Japanese currency carries a weightage of 13.6% in the dollar index.

With pressure from a firm dollar index and importers' purchases of dollars, the RBI intervened through dollar sales to prevent the rupee falling, dealers said. "I think maybe they are not letting the rupee move away from this range as they want to see where the dollar index is settling after the US election," another dealer with a state-owned bank said.

A fall in crude oil prices aided the rupee, dealers said. Oil prices were lower after tensions over supply-side disruptions from West Asia eased. Israel did not strike Iranian oil infrastructure or nuclear facilities in its retaliatory attack Saturday, as was feared earlier. At 1530 IST, the December Brent Crude contract on the Intercontinental Exchange was at $71.88 per barrel, compared with $71.42 per barrel Monday and $76.05 per barrel Friday.

FORWARDS

The premium on the one-year dollar/rupee forward contract ended steady Tuesday as market participants refrained from placing large bets ahead of the release of the US economic data this week, dealers said.

They said the overall volume in the dollar/rupee forward market was low due to a truncated week. Indian financial markets will be closed Friday for Diwali. Dealers also said the total strength on the foreign exchange desk was less on Tuesday.

Dealers said the one-year forward premium, despite being under downward pressure from rising US Treasury yields, was expected to go higher in the coming days on expectations of a higher interest rate differential between the US and India. On Monday, the yield on the 10-year benchmark US Treasury note rose 3 basis points to close at 4.28%, which put downward pressure on the forward premium, dealers said.

At 1530 IST, the premium on the one-year exact-period dollar/rupee forward contract was 189.50 paise, against 189.28 paise Monday. On an annualised basis, the premium was 2.25%, similar to Friday's close.

OUTLOOK

On Wednesday, the rupee will take cues from the movement in the dollar index and in crude oil prices. Importers are expected to continue their purchase of dollars, which is likely to keep the rupee under pressure. They also expect the RBI to intervene in the spot market through dollar sales to keep the Indian unit steady.

Further strength in the dollar index is likely to add to the pressure on the rupee, calling for more aggressive dollar selling by the RBI, dealers said. 

Market participants were awaiting the release of multiple economic data in the US, including the US Job Openings and Labor Turnover Survey, due later Tuesday. The US retail sales data are also scheduled for release later Tuesday. On Wednesday, 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 down ahead of BoJ meet amid political uncertainty

MUMBAI – The Japanese yen was down 0.1% against the dollar ahead of the Bank of Japan's two-day monetary policy meeting on Wednesday. The central bank will announce the decision on Thursday, where it is expected to maintain status quo, while keeping the door open for further interest rate hikes at its policy meeting in December. The central bank's meeting comes amid political uncertainty, as the erstwhile ruling coalition failed to secure majority seats in the general election on Sunday.

Data on Tuesday showed that Japan's unemployment rate fell to 2.4% in September from 2.5% in August, which supported the Japanese currency. The jobs-to-applicants ratio edged up to 1.24 in September, indicating widening of job availability in the country.

The Canadian dollar was up 0.1% against the greenback, following comments by Bank of Canada Governor Tiff Macklem. On Monday, he said that while the central bank's policy rate was headed downward, it would be cautious in its pace and scope at its upcoming meetings. The central bank delivered a 50-basis-point rate cut on Oct. 23.

Though the dollar index eased slightly, it hovered near the three-month high hit on Monday. The index was firm ahead of the US presidential election on Nov. 5. Several polls suggest a very close contest between Republican candidate Donald Trump and his opponent and Democrat candidate Kamala Harris. A poll by The New York Times showed 49% chances of Harris winning the election, with Trump's chances at 48%.

Traders await key economic data from the US, including the Job Openings and Labor Turnover Survey, due later in the day, for more cues on the health of the US economy. At 1506 IST, the dollar index, which measures the strength of the dollar against six major currencies, was at 104.23, compared to its close of 104.30 on Monday and 104.32 on Friday. The index rose to 104.57 on Monday, the highest rise since July. 

The Australian dollar fell 0.1%, while the New Zealand dollar was flat against the greenback.

The euro was up 0.1% against the greenback ahead of the Jul-Sept GDP figures for the Eurozone, due Wednesday. The numbers are expected to show the eurozone's economy expanded 0.8% on year, with a 0.2% rise on a monthly basis, as per a Dow Jones poll.

The pound sterling was up 0.1% against the dollar on Tuesday ahead of the budget presentation by the UK's ruling Labour Party. The budget is likely to include tax increases and spending cuts, the BBC reported.  (Gowri Lakshmi)

India Rupee: In thin band amid lacklustre volume ahead of Diwali

MUMBAI – The rupee remained in a thin range against the dollar Tuesday, with overall volume subdued, dealers said. Traders avoided large bets ahead of the long weekend, they said. The Indian market will be shut on Friday on account of Diwali.

"You can expect little to no movement in the dollar/rupee market this week. Some movement may be seen next week, post US (presidential) elections," a dealer at a private bank said. 

The rupee came under pressure due to demand for dollars from importers, who purchased the greenback to meet their month-end payment obligations, dealers said. Upon continuous dollar purchases from the importers, the rupee hit the day's low at 84.0800, just a shy away from its lifetime low of 84.0850 it hit last week. The rupee has moved a little over 2 paise so far during the day.

The rupee came under pressure due to a strong dollar index, dealers said. The index was hovering around the near three-month high hit on Monday. The index was firm ahead of the US presidential election on Nov. 5. A poll by The New York Times showed 49% chances of Democrat candidate Kamala Harris winning the election, with Republican candidate Donald Trump's chances at 48%.

Traders await key economic data from the US, including the Job Openings and Labor Turnover Survey due later in the day, for more cues on the health of the US economy. At 1244 IST, the dollar index, which measures the strength of the dollar against six major currencies, was at 104.31, compared to its close of 104.30 on Monday and 104.32 on Friday. The index rose to 104.57 on Monday, the highest rise since July. 

Dealers expect the Reserve Bank of India to continue its intervention in the domestic spot market through dollar sales to prevent the rupee from falling sharply and breaching the psychologically crucial level of 84.10. 

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 84.08 a dollar. (Gowri Lakshmi)

India Rupee: Premium steady as traders avoid large bets before US economic data

NEW DELHI – Premium on the one-year dollar/rupee forward contract was steady Tuesday on a dull day so far, as market participants refrained from placing large bets ahead of the release of the US economic data this week, dealers said. They said the overall volume in the dollar/rupee forward market was low due to a truncated week. Indian financial markets will be closed on Friday on account of Diwali. Dealers also said the total strength on the foreign exchange desk was less on Tuesday.

"It didn't move today, and we don't expect any major movement till the FOMC (Federal Open Market Committee)," a dealer with a state-owned bank said. 

Dealers said the one-year forward premium, despite under downward pressure from a rising US Treasury yield, was expected to go higher in the coming days on the expectation of a higher interest rate differential between the US and India. On Monday, the yield on the benchmark 10-year US Treasury note rose 3 basis points to close at 4.28%, which put downward pressure on the forward premium, dealers said.

Market participants remained cautious ahead of the US Presidential election on Nov. 5, dealers said. Several polls suggested a very close contest between Republican candidate Donald Trump and his opponent and Democrat candidate Kamala Harris. A poll by the New York Times showed 49% chances of Harris winning the election, with Trump having 48% chance.

After the election, the US FOMC is expected to cut rates by 25 basis points at its November 6-7 policy meeting, dealers said. As per the CME FedWatch tool, Fed funds futures traders see a 95% chance of Fed cutting rates by 25 bps, with the rest of the odds seen for the status quo.

With the US likely to remain on its rate easing path, and a push-back in expectations of India going for a rate cut, unlike expected earlier by market participants, the interest rate differential between the US and India is likely to remain higher, driving the forward premium up, dealers said.

Market participants awaited the release of multiple economic data from the US, including the US Job Openings and Labor Turnover Survey, due later in the day. The US retail sales data is also lined up for Tuesday.

At 1243 IST, the premium on the one-year exact-period dollar/rupee forward contract was 189.50 paise, against 189.28 paise on Monday. On an annualised basis, the premium was at 2.25%, similar to Monday's close.  (Sourabh Kumar)

India Rupee: Technical Levels for rupee - Oct 29

MUMBAI – At 0900 IST, the rupee was at 84.0675 a dollar, from its previous close of 84.0775. At 1056 IST, the rupee was at 84.0750 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: Most down on firm dollar index; markets eye US economic data

MUMBAI – Most Asian currencies were down against the dollar as the dollar index remained near the highs it hit Monday. The index had hit a near three-month high of 104.57 a dollar on Monday. While it eased in early trade Tuesday, it was still hovering near Monday's highs. The dollar index, which measures the strength of the dollar against six major currencies, was 104.32 at 0953 IST, compared with the previous close of 104.30 on Monday and 104.32 on Friday.

Several polls suggested that both the US presidential candidates, Donald Trump and his opponent Kamala Harris, are in a close race, with a 49% chance seen of Harris winning and a 47% chance for a Trump victory, according to a CNN poll. 

A lot of data points are lined up for this week, which could give indications to investors regarding the health of the US economy. Market participants await the US Job Openings and Labor Turnover Survey, due later in the day. The US retail sales data is also lined up on Tuesday.  
 

The Indonesian rupiah was down 0.3% against the greenback. The Taiwan dollar fell 0.1% against the greenback after data on Monday showed that the country's consumer confidence index in October fell by 0.78 points on month to 77.06.

The Philippines peso was down 0.1% against the dollar. A survey conducted by the central bank on Monday showed that more banks in the Philippines are expected to tighten their lending standards in Oct-Dec. The Malaysian ringgit was down 0.2% against the dollar.

The South Korean won was up 0.1% against the greenback following comments from a central bank official. Lee Soo-hyung said she was not concerned about the dollar liquidity conditions in the foreign exchange market, reports said. The South Korean won has fallen over 7% this calendar year.

The Thai baht was up 0.1% ahead of a meeting scheduled between the central bank and the finance ministry. Meanwhile, Thailand's leading business groups and commercial banks urged Prime Minister Paetongtarn Shinawatra to introduce fresh stimulus packages to spur consumer spending and boost the sluggish economy, Bloomberg reported.  (Gowri Lakshmi)

India Rupee: Steady as bks' dlr sales likely for RBI offset importers' buys

NEW DELHI – The rupee was steady against the dollar as greenback purchases by importers were offset by dollar sales by some banks, likely on behalf of the Reserve Bank of India, dealers said. The RBI likely intervened in the spot market through dollar sales to prevent the rupee from falling beyond 84.0800 a dollar, they said.

"The central bank is protecting 8 level (84.08 a dollar) and if it goes beyond 84.08 (a dollar), it (rupee) will fall quickly to 15-19 levels (84.15-84.19)," a dealer with a state-owned bank said. "That is why importers are also buying right now."

Dealers said importers bought dollars fearing a sharp rise in the dollar/rupee, should it breach the 84.08 a dollar mark. Therefore, the central bank has been protecting the level for the past few days, they said.

This was the eighth consecutive trading day that the rupee opened steady. A broadly strong dollar index weighed on the rupee, dealers said. While the dollar index eased slightly from near a three-month high hit on Monday, it was still hovering around the high. The dollar index held strong ahead of the US presidential elections.

A fall in the Japanese currency, which has a weightage of 13.6% in the dollar index, kept the greenback supported. The yen is under extreme downward pressure due to political uncertainty after the erstwhile ruling party lost a majority in the far-east nation's poll on Sunday.

At 0944 IST, the dollar index, which measures the strength of the dollar against six major currencies, was 104.33, compared to 104.30 on Monday and 104.32 on Friday. The dollar rose to a near three-month high of 104.57 on Monday.

As for the domestic market, a dealer with a state-owned bank said the dollar/rupee pair would likely remain contained "in this narrow range till the (US) election". The rupee has not moved beyond the 3-paise range during the past seven trading days. Even as importers bought dollars fearing a fall in the rupee, exporters are not placing large bets waiting for the Indian currency to fall further, dealers said. 

In the US, several polls show a 47% chance of Republican candidate Donald Trump becoming the US president. His opponent, Democrat candidate Kamala Harris, is seen having a 49% chance. According to most polls, the contest between the two candidates is closer than ever. The US presidential election is scheduled on Nov. 5. 

A fall in crude oil prices aided the rupee, dealers said. Oil prices were lower after tensions over supply-side disruptions from West Asia eased. Israel did not strike Iranian oil infrastructure or nuclear facilities in its retaliatory attack, as was feared. At 0944 IST, the December Brent crude contract on the Intercontinental Exchange was $71.43 per barrel, compared to $71.42 per barrel on Monday and $76.05 per barrel on Friday.

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 84.08 a dollar.  (Sourabh Kumar)

India Rupee: Expected range for rupee - Oct 29

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