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Informist, Thursday, Oct. 31, 2024

By Sourabh Kumar

NEW DELHI – After falling to a record low of 84.0950 a dollar, the rupee ended steady Thursday, as the Reserve Bank of India likely intervened in the market by selling the greenback, dealers said. The rupee hit a record low during the day, coming under pressure from dollar purchases by banks for overseas investors, dealers said.

"There was definitely resistance at 84.09 levels because they (central bank) were protecting it (84.09 a dollar)," a dealer with a state-owned bank said. Dealers said the RBI swung into action after the rupee started feeling the heat of foreign fund outflows from domestic equities.

After touching the day's high of 84.07 a dollar, the rupee settled at 84.0750 a dollar. On Wednesday, the rupee had closed at 84.0775 a dollar. The rupee opened steady against the dollar, as a fall in the dollar index was offset by a rise in crude oil prices, dealers said.

The dollar/rupee pair moved in a range of just under 3 paise during the day, the 10th consecutive day that the Indian rupee did not move beyond the 3-paise range. "It shows that it's only the central bank who is driving the pair," a dealer with another state-owned bank said. "I am just watching the screen. What is there to trade?"

The central bank has been continuously preventing the rupee from falling sharply, dealers said. Trade volume was relatively low on Thursday, as major centres, including Delhi and Chennai, were closed for Diwali. The money market is closed on Friday for the festival of lights.

Banks purchased the greenback on behalf of foreign investors who pulled out money from Indian equities, which weighed on the rupee, dealers said. The Nifty 50 and the BSE Sensex ended down 0.6% and 0.7%, respectively, on Thursday. Overseas investors have pulled out around $10 billion from Indian equities so far in October.

Some banks also purchased the greenback on behalf of oil marketing companies and other importers, which also weighed on the domestic currency, dealers said. Demand for dollars from importers was mainly to meet their month-end payment obligations, dealers said. 

The rise in crude oil prices also weighed on the Indian rupee, dealers said. Oil prices rose after data showed an unexpected fall in US crude and gasoline inventories last week. The fall was primarily on account of strong demand, a report by the Energy Information Administration said. At 1530 IST, the December Brent crude contract on the Intercontinental Exchange was $72.73 per barrel against its previous close of $72.55 on Wednesday, and $71.12 a barrel on Tuesday.

Oil prices also found support as the Organization of the Petroleum Exporting Countries and its allies were reported to be considering a delay in their planned increase in oil output. The group was scheduled to raise crude output by 180,000 barrels per day from December. The group had already delayed its plan once in October.

Such pressure on the rupee was met by the RBI's intervention, which likely sold the greenback at around 84.09 a dollar, preventing the Indian currency's sharp fall, dealers said. "We do not expect the (dollar/rupee) range to shift, as they (central bank) would want it to keep it under control until at least (US) elections," a dealer with another state-owned bank said.

The dollar index, which had eased early Thursday, came under more pressure in early European trade on the back of a sharp rise in the Japanese yen. The index, which measures the strength of the greenback against a basket of six major currencies, was at 103.96 at 1530 IST against 104.10 on Wednesday and 104.28 on Tuesday. 

Market participants are awaiting the US jobs data on Friday. They are also awaiting the outcome of the US presidential elections and the US Federal Open Market Committee meeting next week. Donald J. Trump and Kamala Harris are in a tight race in the US presidential election scheduled for Nov. 5, according to several polls. A poll by The Economist/YouGov and TIPP Insights, released on Wednesday, indicated that Harris had a slight advantage with 44% of the voters supporting her compared with 43% for Trump.

FORWARDS

Premium on the one-year dollar/rupee forward contract ended steady Thursday amid thin volumes, dealers said. Market participants refrained from placing large bets, waiting for major events lined up next week, they said.

Market participants are awaiting the outcome of US presidential elections and the Federal Open Market Committee's meeting next week. The outcome of the US FOMC meeting is due on Nov. 7, two days after the presidential election. Currently, Fed funds futures traders see a 96.1% chance of a 25-basis-point rate cut, with the rest of the odds for status quo, as per CME FedWatch tool.

With the US Federal Reserve seen continuing to lower interest rates and the Reserve Bank of India likely to delay rate cuts beyond December, the US-India interest rate differential is likely to increase and drive up forward premiums, dealers said.

At 1530 IST, the premium on the one-year exact-period dollar/rupee forward contract was 189.99 paise, against 190.43 paise on Wednesday. On an annualised basis, the premium was 2.26%, against Wednesday's close of 2.25%.

OUTLOOK

The market will be closed on Friday for Diwali. On Monday, the rupee will take cues from the movement of the dollar index and crude oil prices.

Importers are expected to continue their dollar purchases, which is likely to keep the rupee under pressure. Dealers expect the RBI to intervene in the spot market through dollar sales to keep the Indian unit from falling sharply.

Market participants await the US jobs data due Friday. The rupee is expected to remain in the range of 84.00-84.15, with a strong support at 84.10 a dollar. 

India Rupee - World FX: Yen rises 0.6% as Bank of Japan hints at rate hike

NEW DELHI – The Japanese yen rebounded, rising 0.6% against the US dollar, after the Bank of Japan kept its benchmark rates steady as widely expected, but indicated a potential rate hike in December. The yen has been under extreme pressure in the last few days after the ruling party lost the general election in the Asian nation.

The euro was steady against the US currency. The flash figures showed that the eurozone grew 0.4% in Jul-Sept, faster than the forecast of 0.2% growth in a Reuters poll, which supported the euro. In the previous quarter, the eurozone expanded 0.3%.

The dollar index eased in early European trade, weighed by a sharp upward movement in the Japanese yen. The index, which measures the strength of the greenback against a basket of six major currencies, was 104.02 at 1441 IST, as against 104.10 on Wednesday and 104.28 on Tuesday. The Japanese yen carries a weight of 13.6% in the dollar index. Market participants are awaiting the release of the US jobs data on Friday.

The pound sterling was up 0.2% against the dollar after the British finance minister said the country's growth next year is expected at 2.0%, citing UK Office for Budget Responsibility forecasts. The Office for Budget Responsibility had earlier forecast a rise of 1.9%. 

The Australian dollar was steady against the greenback. The Canadian dollar was down 0.1% against the US currency ahead of the release of GDP data, due Thursday. The losses in the Canadian currency were limited because of a rise in crude oil prices. As Canada is a major crude exporter, a rise in its prices positively affects its currency.  (Sourabh Kumar)

India Rupee: Premium steady amid low volume; mkt eyes US election, FOMC meet

NEW DELHI – The premium on the one-year dollar/rupee forward contract was steady on a day of low volumes, dealers said. Market participants refrained from placing large bets, waiting for major events lined up next week, they said.

"The volume is about 60% of the usual volume, which was already low for the past couple of days," a dealer with a state-owned bank said. Trade volume was relatively low Thursday, as major centres, including Delhi and Chennai, were closed for Diwali. The money market will be closed on Friday on account of the festival.

Dealers said market participants were waiting for next week's US presidential elections and the outcome of the US Federal Open Market Committee's meeting. The US presidential election is scheduled for Nov. 5. Both the candidates, Donald J. Trump and Kamala Harris, are in a close race, according to several polls, with the latest one by The Economist/YouGov and TIPP Insights, released on Wednesday, indicating Harris had a slight lead with 44% of voters' support compared with 43% for Trump.

Just two days after the election, the outcome of the US FOMC meeting is due. Dealers said most market participants remained on the sidelines before the rate decision. As of today, Fed funds futures traders see a 96.1% chance of a 25-basis-point rate cut at the next meeting, with the rest of the odds for status quo, as per CME FedWatch tool.

With the Fed seen continuing to lower interest rates and the Reserve Bank of India pushing back on rate cut expectations at its December meeting, the US-India interest rate differential is likely to increase and drive up forward premiums, dealers said.

At 1316 IST, the premium on the one-year exact-period dollar/rupee forward contract was 189.24 paise, against 190.43 paise on Wednesday. On an annualised basis, the premium was 2.25%, similar to Wednesday's close.  (Sourabh Kumar)

India Rupee: Hits record low on FPI outflows; RBI's dollar sales limit fall

NEW DELHI – The rupee fell to a record low of 84.0900 a dollar on purchases of the greeback by some banks', likely on behalf of overseas investors, who pulled out their money from domestic equities, dealers said.

"Some FPI buying is seen, but the central bank is there to protect 9 level (84.09 a dollar)," a dealer with a state-owned bank said. "While the overall volume was low, some demand from FPIs ended up pushing the rupee down."

Trade volume was relatively low on Thursday, as major centres, including Delhi and Chennai, were closed for Diwali. The money market is, however, closed on Friday for the Indian festival of lights.

Domestic equities were down, with the Nifty 50 falling 0.4% and the BSE Sensex down 0.5%. Banks purchased dollars for foreign fund outflows, which weighed on the Indian currency, dealers said. Some banks also purchased dollars for oil marketing companies, which demanded the greenback to meet their month-end payment obligations. So far in October, overseas investors pulled out around $10 billion from Indian equities.

With such pressure on the Indian currency, the Reserve Bank of India is likely to have sold the dollar to prevent the rupee from falling sharply, dealers said. Due to the RBI's likely intervention, the dollar/rupee was stuck in a very narrow range, moving under 2 paise so far Thursday.

A rise in crude oil prices also weighed on the rupee, dealers said. Oil prices rose after data showed an unexpected fall in US crude and petrol inventories last week. Further, reports of the Organization of the Petroleum Exporting Countries and its allies considering a delay in their planned increase in oil output in December also supported crude oil prices.

At 1205 IST, the December Brent crude contract on the Intercontinental Exchange was $72.99 per barrel against its previous close of $72.55 on Wednesday, and $71.12 a barrel on Tuesday.  (Sourabh Kumar)

India Rupee: Technical Levels for rupee - Oct 31

NEW DELHI – At 0900 IST, the rupee was at 84.0800 a dollar, from its previous close of 84.0775. At 1046 IST, the rupee was at 84.0800 per dollar. Following are the key support and resistance levels for the rupee as provided by leading banks and brokerages:

(Sourabh Kumar)

India Rupee: Steady amid lower volume; rise in oil prices offsets weaker dlr

NEW DELHI – The rupee was steady in early trade, with dealers seeing comparatively lower volume. The Indian currency was little changed as slight easing of the dollar index offset pressure from an increase in crude oil prices, dealers said.

"The volumes are very less today, and that is how it is going to be for the rest of the day," a dealer with a private bank said. "Since a lot of corporates are closed today, that also affected volumes."

While the money market will remain closed on Friday for Diwali, the festival is being celebrated on Thursday in many parts of the country. The strength in dealing rooms is comparatively low, as some traders are on leave.

Dealers said that since the overall volume is likely to be low during the day, even a slightly higher volume could sway the dollar/rupee on either side. Should the rupee come under pressure, dealers expect the Reserve Bank of India to intervene by selling dollars to prevent the Indian currency from falling sharply. 

A rise in oil prices weighed on the rupee, dealers said. Oil prices rose after data showed an unexpected fall in US crude and gasoline inventories last week to a two-year low level. The fall was primarily on account of strong demand, a report by the Energy Information Administration said. 

Oil prices also found support as the Organization of the Petroleum Exporting Countries and its allies were reported to be considering a delay in their planned increase in oil output. The group was scheduled to raise crude output by 180,000 barrels per day from December. The reported delay in higher oil output, if true, would come after the group had already delayed its plan once in October.

At 0928 IST, the December Brent crude contract on the Intercontinental Exchange was $72.90 per barrel against its previous close of $72.55 on Wednesday, and $71.12 a barrel on Tuesday.

The dollar index remained steady after easing from the three-month high of 104.64 it touched Tuesday. However, the index was still holding firm, above the 104 mark. Market participants are waiting for US jobs data 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 - Asia FX: Most steady as dlr index stable after easing slightly

NEW DELHI – Most of the Asian currencies were steady against the US dollar. The dollar index remained steady ahead of jobs data later this week and the US presidential elections next week. Investors assessed some economic data released Wednesday, which showed underlying strength in the US economy.

Data released Wednesday showed that private payrolls in the US rose far more than expectations in October. The payrolls increased by 233,000 jobs in October, against a forecast of 114,000 by a Reuters poll. The data for September was also revised to show an increase of 159,000 jobs from the previously reported 143,000 jobs.

The advance US GDP estimate for Jul-Sept, also released on Wednesday, showed that the world's largest economy grew at 2.8% during that quarter, the fastest in one and a half years. However, the figure fell short of expectations of a 3.0% rise by economists polled by Reuters.

The dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 104.19 against 104.10 on Wednesday and 104.28 Tuesday. Market participants are waiting for US jobs data Friday.

The South Korean won was down 0.1% against the dollar as the country's exports growth is expected to slow down. A poll by Reuters showed the country's exports would have grown by a slower pace for the third consecutive month in October. South Korea's exports are expected to rise 6.9% on year in October, against a 7.5% on year rise in September.

The Philippines peso and Thai baht were steady against the greenback. The Indonesian rupiah was marginally down against the US currency. The Malaysian ringgit was also steady against the greenback. The Taiwan dollar, on the other hand, rose 0.3%. The country's stock market is closed Thursday due to threat from typhoon Kong-Rey.  (Sourabh Kumar)

India Rupee: Expected range for rupee - Oct 31

NEW DELHI – Following are the expected support and resistance levels for the rupee on Thursday, 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 Saji George Titus

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