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Informist, Thursday, Nov. 21, 2024

 

By Gowri Lakshmi

 

MUMBAI – The rupee settled at a record low against the dollar on Thursday as banks continuously purchased the greenback on behalf of foreign portfolio investors and as the dollar index strengthened, dealers said.

 

The rupee was also weighed by persistent dollar demand from importers, who feared a further fall in the local unit, dealers said. However, dollar sales by state-owned banks, likely on behalf of the Reserve Bank of India, prevented the rupee from falling sharply, they said.

 

After falling 0.1%, the rupee settled at a record low of 84.4925 a dollar, against 84.4150 on Tuesday. The currency market was closed on Wednesday on account of the Maharashtra assembly elections. The rupee moved in a relatively wider range of 10 paise during the day.

 

The rupee started the day steady at 84.3950 a dollar as dollar sales, likely on behalf of the RBI, offset the impact of dollar purchases by importers and FPIs. Banks continuously bought the greenback on behalf of foreign portfolio investors looking to withdraw funds from the domestic equities market, dealers said. So far in November, overseas investors have withdrawn $2.6 billion from the Indian stock market. 

 

"FPI outflow happened mostly because of a "risk off" sentiment amongst investors as they are anticipating a further escalation in the Russia-Ukraine war," a dealer at a state-owned bank said. 

 

Ukraine fired a volley of British Storm Shadow cruise missiles into Russia on Wednesday, the latest new Western weapon it has been permitted to use on Russian targets, a day after it fired US ATACMS missiles. Russian President Vladimir Putin approved a new nuclear doctrine on Tuesday after the US allowed Ukraine to use American long-range missiles against Russia. 

 

Benchmark share indices, the Nifty 50 and the Sensex ended down 0.7% and 0.5% respectively, on Thursday. The fall in domestic equities was led by a decline in shares of the Adani Group companies after its Chairperson Gautam Adani was indicted by a New York federal court on charges of bribery and fraud. The decline in equity indices weighed on the rupee, dealers said.

A rebound in the dollar index after comments from the US Federal Reserve Governor Michelle Bowman also weighed on the local unit, according to dealers. Bowman on Wednesday said that the Fed needs to be cautious while cutting rates due to stickier inflation. She said progress in bringing inflation towards the 2% target seems to have stalled in recent months. At 1530 IST, the dollar index, which measures the strength of the dollar index against six major currencies, was 106.71, against its previous close of 106.64 on Wednesday and 106.15 on Tuesday.

 

Public sector banks actively sold the greenback, likely for the RBI, for most part of the day, which prevented the domestic unit from falling sharply and curbed excessive volatility in the market, dealers said. However, the central bank's dollar sales were not very aggressive in nature, they said. 

 

"The RBI was active through its dollar sales, but they were not as aggressively selling compared to previous sessions. It broke the key support level of 84.45 a dollar, we now see strong support at 84.55," a dealer at a state-owned bank said. 

 

Dealers expect the central bank to allow slow and gradual depreciation in the Indian unit going ahead. "There will be a 5 paise or 10 paise depreciation theme (for the rupee) every week," said a dealer at another state-owned bank. 

 

Some foreign banks also sold dollars on behalf of exporters, who wanted to take advantage of the relatively higher dollar/rupee levels, dealers said. This also supported the Indian unit.

 

"The rupee breached 84.45 (a dollar) but stop losses were not triggered much as the market knew it was just a temporary outflow because of the Adani issue," a dealer at a foreign bank said. 

 

	AT 1530 IST	AT 0900 IST	HIGH	LOW	PREVIOUS(AT 1530 IST)
Spot rupee per $1	84.4925	84.3950	84.3950	84.4925	84.4150
1-year dlr/rupee fwd (paise)	182.52	185.22	185.22	181.81	182.86

 

FORWARDS

The premium on the one-year dollar/rupee forward contract ended slightly lower Thursday as some banks sold dollars for forward delivery, noting the relatively higher levels, dealers said. The premium had risen almost 13 bps after falling to a near three-month low of 2.06% last week.

 

Market participants are now keenly waiting for economic data from the US and India for cues on the interest rate trajectory in the two countries. With chances of the Fed cutting rates less aggressively and no signs of an immediate rate cut by the RBI, the interest rate differential is expected to widen, but not as much as previously anticipated, they said. 

 

Market participants are still divided about a rate cut by the US Federal Open Market Committee at its meeting in December. As of Thursday, the odds of a rate cut by the Fed in December were 55.7%, down from 72.2% seen a week ago, as per the CME FedWatch tool.

 

At 1530 IST, the premium on the one-year exact-period dollar/rupee forward contract was 182.52 paise, against 182.86 paise on Tuesday. On an annualised basis, the premium was at 2.16% from Tuesday's close of 2.17%.

 

OUTLOOK

On Friday, the rupee will take cues from movement in the dollar index and crude oil prices. Traders will also closely watch developments in the Russia-Ukraine war.

 

Dealers expect FPIs to keep pulling out money from Indian equities in the coming days, keeping the Indian currency under pressure. They also expect banks to continue buying dollars on behalf of importers, fearing a further fall in the rupee.

 

However, the domestic unit will continue to get support from dollar sales by the RBI, they said. The RBI's intervention is expected to keep the Indian unit from falling sharply and avert excessive volatility. 

 

During the day, the rupee is seen in a range of 84.40-84.55 a dollar, with immediate technical support pegged at 84.50.

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India Rupee - World FX: Yen up 0.6% after BoJ Governor Ueda's remarks

 

	AT 1530 IST	HIGH	LOW	PREVIOUS
GBP/USD	1.2628	1.2660	1.2623	1.2651
EUR/USD	1.0517	1.0555	1.0514	1.0544
NZD/USD	0.5862	0.5886	0.5860	0.5875
AUD/USD	0.6507	0.6524	0.6504	0.6504
USD/JPY	154.2510	155.4410	154.0880	155.4380
USD/CAD	1.3973	1.3978	1.3956	1.3974
EUR/JPY	162.2350	163.9125	162.0700	163.8500
CHF/USD	1.1320	1.1337	1.1307	1.1309
EUR/CHF	0.9291	0.9329	0.9285	0.9322

 

MUMBAI – The Japanese yen rose 0.6% against the dollar after Bank of Japan Governor Kazuo Ueda said that the central bank will closely watch and scrutinise various economic data before the monetary policy meeting in December. "Vast amount of data and information will become available between now and then," Ueda said Thursday. "We do seriously take into account exchange-rate movements in forming our economic and inflation outlook including the question of what's causing the exchange-rate changes that are taking place at the moment."

 

A slim majority of traders see the central bank maintaining the status quo at its December policy meeting, with a 90% probability of the Bank of Japan hiking rates in March. Market participants are keenly waiting for the November flash manufacturing purchasing manager's index and the October consumer price index, both due Friday. They also await the September final labour survey due Friday to get more cues on the health of the Japanese labour market. 

 

The Australian dollar was up 0.2% against the greenback as the Reserve Bank of Australia's November policy meeting minutes indicated that the central bank will continue a "restrictive" monetary policy, given the potential for further increase in inflation. 

 

The New Zealand dollar was down 0.1% against the US currency ahead of the Reserve Bank of New Zealand's monetary policy meeting, scheduled Wednesday. Reports suggested that traders have fully priced in a 50-basis-point rate cut at its next policy meeting. However, some market participants still see a chance for the central bank to proceed with a super-sized 75 bps cut. A rate cut is supported by the data released on Thursday, which showed that New Zealand's inflation rate has fallen back to the central bank's target of 1-3%. In Jul-Sept, inflation rose 2.2% on an annual basis.

 

The pound sterling was down 0.2% against the dollar, as the dollar index strengthened further in early European market hours. The fall in sterling was contained as market participants assessed a falling chance of a rate cut by the Bank of England in December. Data released on Wednesday showed that inflation in the UK rose 2.3% on year in October, higher than the market expectations of a 2.2% rise.

 

The euro was down 0.1% against the greenback. The dollar index rebounded as market participants re-assessed the probability of an interest rate cut by the US Federal Reserve. On Wednesday, Federal Reserve Governor Michelle Bowman said that she would want to move "cautiously" on further interest rates. "I would prefer to proceed cautiously in bringing the policy rate down to better assess how far we are from the end point, while recognising that we have not yet achieved our inflation goal and closely watching the evolution of the labour market," Bowman said. 

 

Currently, traders see a 55.7% probability of the Fed cutting rates by 25 bps at its December policy meeting, while 44.3% see a chance of the central bank maintaining the status quo. At 1502 IST, the dollar index, which measures the strength of the dollar against six major currencies, was 106.70, against its close of 106.64 on Wednesday and 106.15 on Tuesday. (Gowri Lakshmi)

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India Rupee: Premium falls as banks sell fwd dollars noting higher levels

 

	AT 1445 IST	AT 0900 IST	HIGH	LOW	PREVIOUS(AT 1530 IST)
Spot rupee per $1	84.4800	84.3950	84.3950	84.4875	84.4150
1-year dlr/rupee fwd (paise)	182.02	185.22	185.22	181.81	182.86

 

MUMBAI – The premium on the one-year dollar/rupee forward contract fell Thursday as some banks sold dollars for forward delivery, noting the relatively higher dollar/rupee forward levels, dealers said.

 

"Some receiving is there in the market on higher levels," a dealer at a private bank said. "The fear of dollar shortage is not much right now." Dealers said some banks sold dollars for forward delivery, noting a relatively higher one-year dollar/rupee forward premium. Premiums have risen after falling to a near three-month low of 2.06% last week.

 

Dealers said market participants were keenly watching inflation and growth numbers in the US and India to assess the interest rate trajectory in the two countries. With chances of the Fed cutting rates less aggressively and no signs of an immediate rate cut by the Reserve Bank of India, the interest rate differential is expected to widen, but not as much as previously anticipated, they said. The slower widening in interest differential is expected to cap a rise in forward premiums, dealers said.

 

The one-year forward premium also fell due to a rise in the benchmark 10-year US Treasury yield, dealers said. The US Treasury yield was slightly up on Wednesday as investors assessed comments by Federal Reserve Governor Bowman, who said efforts to bring inflation down to 2% will take more time and effort. Premiums on a currency pair's forwards reflect the interest rate differential between the two countries.

 

With the US Federal Open Market Committee meeting scheduled in December, market participants are still divided in their opinion about a rate cut. As of Thursday, the odds of a rate cut by the Fed in December were 55.7%, down from 72.2% seen a week ago, as per the CME FedWatch tool.

 

Most dealers said the one-year dollar/rupee forward premium is expected to move in a range of 2.05% to 2.30% till the FOMC meeting in December. There is still no clarity about the rate situation in the US," a dealer with another private bank said. "And that is going to keep out forward in a range, but can't really say the direction in which it would move sustainably."

 

At 1441 IST, the premium on the one-year exact-period dollar/rupee forward contract was 182.02 paise, against 182.86 paise on Tuesday. On an annualised basis, the premium was at 2.15%, down from Tuesday's close of 2.17%. The market was closed on Wednesday due to the state assembly elections in Maharashtra.  (Sourabh Kumar)

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India Rupee: Falls to record low on FPI outflows; RBI dollar sales aid

 

	AT 1335 IST	AT 0900 IST	HIGH	LOW	PREVIOUS(AT 1530 IST)
Spot rupee per $1	84.4625	84.3950	84.3950	84.4750	84.4150

 

MUMBAI – The rupee hit a record low of 84.4750 on Thursday as banks bought dollars on behalf of foreign portfolio investors who continued to exit the domestic equity market, dealers said. However, some state-owned banks sold dollars, likely on behalf of the Reserve Bank of India, which limited a further fall in the local unit, they said. 

 

The RBI actively sold dollars in order to prevent the rupee from falling sharply and to curb excessive volatility in the market, according to dealers. However, they said the RBI's dollar sales were less aggressive in nature, since it let the rupee fall below the key technical support level of 84.45 a dollar.

 

So far in November, foreign portfolio investors have withdrawn $2.56 billion from the domestic stock market. "They (FPIs) sell off continues. It is not just an issue with India but from all emerging markets, FPIs are active, and they are reinvesting in safe haven assets and dollar," a dealer at a private bank said.

 

At 1335 IST, both the benchmark share indices Nifty 50 and Sensex were down 0.8% and 0.6%, respectively. The fall in domestic equities was led by a decline in shares of the Adani group companies after Chairperson Gautam Adani was indicted in a New York federal court on charges of bribery and fraud.

 

The rupee also came under pressure as banks bought dollars on behalf of importers, wary of further depreciation in the domestic currency, dealers said. A rebound in the dollar index as investors tempered hopes of aggressive rate cuts by the US Federal Reserve, also put the rupee under pressure, they said. Currently, traders have priced in a 52% probability of the US Fed cutting rates at its December policy meeting, while 48% see a chance of the central bank maintaining status quo. At 1335 IST, the dollar index, which measures the strength of the dollar against six major currencies, was at 106.62, against Wednesday's close of 106.64 and 106.15 on Tuesday.

 

For the rest of the day, the rupee is likely to move in a range of 84.40-84.50 against the dollar. Dealers now see strong immediate technical support for the Indian unit at 84.50 a dollar. (Gowri Lakshmi)

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India Rupee: Technical Levels for rupee - Nov 21

 

MUMBAI – At 0900 IST, the rupee was at 84.3950 a dollar, against its previous close of 84.4150. At 1038 IST, the rupee was at 84.4275 per dollar. The following are the key support and resistance levels for the rupee as provided by leading banks and brokerages:

 

Participants	S2	S1	R1	R2
Private bank	84.45	84.42	84.37	84.35
Private bank	84.43	84.42	84.38	84.35
Brokerage firm	84.50	84.42	84.38	84.35

 

(Sourabh Kumar and Pratiksha)

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India Rupee: Hits record low on importer dlr buys; RBI dlr sales limit fall

 

	AT 0922 IST	AT 0900 IST	HIGH	LOW	PREVIOUS(AT 1530 IST)
Spot rupee per $1	84.4175	84.3950	84.3950	84.4225	84.4150

 

MUMBAI – The rupee fell to a record low of 84.4225 a dollar Thursday as banks continuously purchased the greenback on behalf of importers, dealers said. However, public-sector banks stepped in through dollar sales, likely on behalf of the Reserve Bank of India, which limited the fall of the rupee, they said.

 

"There is (dollar) buying since morning. It's a mixed batch of buying-importers, oil marketing companies and others. We can see the rupee moving between 84.41-84.44 (a dollar)," a dealer at a state-owned bank said.

 

Importers bought dollars anticipating a further fall in the rupee, which weighed on the local unit, dealers said. Rise in crude oil prices on escalation in Russia-Ukraine war also prompted oil marketing companies to buy dollars as they fear further rise in crude oil prices, dealers said. At 0942 IST, the January Brent crude contract on the Intercontinental Exchange was at $72.96 per barrel, against the previous close of $72.81 per barrel. Crude oil prices rose as much as $73.23 per barrel Thursday.

 

The rupee was also weighed down by a rebound in the dollar index as investors assessed the chances of a less aggressive rate cut by the US Federal Reserve at its upcoming policy meeting. Traders have priced in a 52% probability of the Fed lowering its rate by 25 basis points at its December meeting, while 48% see a chance of the central bank maintaining status quo.

 

At 0949 IST, the dollar index, which measures the strength of the dollar against six major currencies, was 106.53, against its close of 106.35 on Wednesday and 106.15 on Tuesday.

 

However, public sector banks sold the greenback, likely on behalf of the RBI, which prevented the rupee from falling sharply and curbed volatility in the domestic spot market, dealers said. Traders are now waiting for key US economic data for more cues on the health of the US economy. "After the data, we can expect some inflow-outflow movements once investors are done analysing the figures this week," a dealer at a state-owned bank said.

 

A fall in the domestic equities also weighed on the rupee, dealers said. The Nifty 50 and the BSE Sensex were down 0.9% and 0.8%, respectively. During the day, the rupee is likely to move in a range of 84.35-84.45 against the dollar. Dealers see strong immediate technical support for the Indian unit at 84.45 a dollar. (Gowri Lakshmi)

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India Rupee - Asia FX: Mixed; rebound in dollar index weighs

 

MUMBAI – Asian currencies were mixed against the dollar, with the Indonesian rupiah falling 0.5%, the most amongst its Asian peers. The losses in the Indonesian currency were limited as the country's central bank kept the rates steady at 6.0% on Wednesday. Bank Indonesia Governor Perry Warjiyo said the room for rate cuts seems narrower.

 

Some Asian currencies came under pressure due to a recovery in the dollar index. The US dollar recovered as traders assessed chances of less aggressive rate cuts by the US Federal Reserve. This was after Federal Reserve Governor Michelle Bowman said the task of bringing US inflation down to the 2% target had become more difficult.

 

The dollar index, which measures the strength of the greenback against a basket of six major currencies, was 106.56 at 0833 IST, against 106.64 on Wednesday and 106.15 on Tuesday. The US currency also got support from demand for safe-haven assets as investors analysed the escalation in the Russia-Ukraine war. Russia updated its nuclear doctrine, easing the terms of using nuclear weapons. The decision by Russia follows the decision by the US to allow the use of long-range missiles by Ukraine to strike deep into Russia. The doctrine now says that an attack by a non-nuclear state, if backed by a nuclear power, will be treated as a joint assault on Russia, as per reports. After the Biden administration allowed the use of long-range missiles by Ukraine to strike deep into Russia, Ukraine fired those missiles into Russia on Tuesday, reports said. 

 

Market participants now await the release of economic data from the US, such as the manufacturing and services purchasing managers' index, scheduled on Friday. As of Thursday, the odds of a 25-basis-point rate cut were 55.7% against 82.5% a week ago. The chances of rates remaining unchanged were 44.3%.

 

The Taiwan dollar was down 0.3% against the greenback. The Philippines peso was steady against the US dollar. Bucking the trend, the South Korean won was up 0.2% against the greenback after data showed exports so far in November rose 5.8% on year, against a fall of 0.2% in the full month of October. The Thai baht and the Malaysian ringgit rose 0.1% against the US currency.  (Sourabh Kumar)

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India Rupee: Expected range for rupee - Nov 21

 

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: 

 

PARTICIPANTS	SUPPORT	RESISTANCE
State-owned bank	84.43	84.35
Foreign bank	84.50	84.35
Foreign bank	84.45	84.38
Private bank	84.42%, respectively	84.38% and

 

 

 

 

 

 

 

(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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