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Informist, Friday, Nov. 22, 2024

By Pratiksha

NEW DELHI – The Reserve Bank of India's active intervention, both verbal and through dollar sales, and a surge in domestic equities ensured that the rupee settled slightly higher against the dollar on Friday after hitting a lifetime low during the day, dealers said. 

Informist reported Friday, citing currency dealers, that the RBI asked some banks to trim large bets against the rupee in the spot market to keep the domestic currency from falling below the key support level of 84.50 per dollar. 

Dollar purchases on behalf of foreign portfolio investors and importers weighed on the rupee, dealers said. A surge in the dollar index to an over two-year high also weighed on the Indian unit, they said.

After hitting a record low of 84.5000 a dollar during the day, the Indian unit settled at 84.4450 a dollar, against 84.4925 on Thursday. The Indian unit moved in a tight range of 6 paise during the day.

The Indian currency started the day broadly unchanged at 84.4900 a dollar, after trading around 84.52 a few minutes before in the offshore non-deliverable forwards market, as the central bank likely intervened through dollar sales in the offshore NDF market, dealers said. "They (RBI) were on offer (selling dollars) in the offshore market and then that continued in the onshore market as well," said a dealer at a foreign bank. 

Shortly after the market opened, the Indian unit fell to its lifetime low as banks stepped in to buy dollars on behalf of importers, on fears that the currency may fall further in the coming days, dealers said. The rupee has depreciated almost 0.5% against the dollar so far this month. "They (RBI) have allowed a steady fall (in the rupee). In the offshore market also it has fallen a lot, so everybody is expecting the depreciation bias to stay," said a dealer at a state-owned bank. 

The RBI marked its presence through its dollar sales intervention around 84.50 a dollar and made sure that the currency did not breach the key level throughout the day, dealers said. The central bank's greenback sales were aggressive in nature, they said. Some dealers said the RBI may have sold almost $1 billion-$1.5 billion in the domestic spot market on Friday. 

Moreover, the central bank also deployed verbal intervention, where it asked some big state-owned, private and foreign banks to cut their large positions against the rupee, currency dealers told Informist. The RBI informally communicated the directions to banks through phone calls on Friday. "They (RBI) are going out of the way to keep it (rupee) stable," said a dealer at a private bank. "I don't think that even if 84.50 breaks, there will be a big movement. The rupee will barely go to 84.52-84.53." 

Meanwhile, foreign and private banks bought the greenback on behalf of FPIs, who continued to leave the domestic equity market, dealers said. This also weighed on the Indian unit, dealers said. So far this month, FPIs have withdrawn $2.8 billion from the domestic stock market.

The dollar index, which measures the strength of the greenback against six major currencies, hit an over two-year high during the day, which also exerted pressure on the local unit, according to dealers. The dollar index was boosted by weakness in the euro and pound sterling after weak economic data in the eurozone and the UK.

At 1530 IST, the dollar index was at 107.54, against 107.03 on Thursday and 106.64 on Wednesday. The index rose to 108.07 earlier in the day, the highest level since November 2022. 

A rise in domestic share indices also gave support to the Indian currency, dealers said. On Friday, the Nifty 50 and BSE Sensex ended 2.4% and 2.5% higher, respectively. The indices marked their biggest intraday rise in five months and the biggest weekly gain in eight weeks.

FORWARDS

The premium on the one-year dollar/rupee forward ended slightly lower, tracking a slight rise in US Treasury yields, dealers said. The benchmark 10-year US Treasury yield rose Thursday as investors assessed lower-than-expected unemployment claims data. 

The weekly initial jobless claims in the US fell by 6,000 to a seasonally adjusted 213,000, a seven-month low and below the forecast of 220,000 by economists polled by Reuters, suggesting that job growth had recovered after disruptions from hurricanes and labour strikes last month. 

With the US Federal Open Market Committee meeting scheduled in December, market participants are still split about a rate cut next month. Currently, the odds of a 25 bps rate cut by the Fed in December are 59.4% and the probability of a status quo next month is 40.6%, as per the CME FedWatch tool.

Premiums also fell as some banks sold dollars for forward delivery on behalf of exporters, noting the relatively higher dollar/rupee forward levels, dealers said. Premiums had fallen to a near three-month low of 2.06% last week.

At 1530 IST, the premium on the one-year exact-period dollar/rupee forward contract was 181.18 paise, against 182.52 paise on Thursday. On an annualised basis, the premium was at 2.15%, against Thursday's close of 2.16%.

OUTLOOK

On Monday, the rupee will take cues from movement in the dollar index and crude oil prices, dealers said. The Indian unit may remain under pressure owing to sustained FPI outflows from Indian equities, they said. 

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

"Overall, with the dollar index trending higher and the rupee remaining overvalued by more than 7%, the direction for the rupee is to weaken. Any correction in the rupee will be a buying opportunity for importers who have been starved for the correction," said Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors LLP.

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

India Rupee - World FX:Euro falls as PMI shows contraction; dlr at 2-yr high

MUMBAI – The euro was down 0.6% against the dollar as it plummeted to levels close to two-year lows on Friday, falling beneath 1.0400 a dollar. This decline followed the publication of the preliminary HCOB Eurozone Purchasing Managers Index report for November, indicating an unexpected contraction in overall business activity. The Eurozone Composite PMI fell to 48.1, whereas analysts had anticipated that the economic figures would stay close to the neutral mark of 50.0. A reading below 50.0 indicates a contraction in economic activity.

The pound sterling was down 0.5% against the dollar after data showed business operations within the UK private sector experienced a decline in early November, as indicated by the initial S&P Global/CIPS Composite Purchasing Managers Index, which dropped to 49.9 from 51.8 in October, falling short of the anticipated market figure of 51.8.

During the same timeframe, the manufacturing PMI dropped to 48.6 from 49.9, indicating a faster pace of decline in economic activity. Furthermore, the services PMI fell to 50 from 52. Moreover, retail sales, a key measure of consumer spending, declined 0.7% on month in October. In September, sales had increased by a marginal 0.1%, downwardly revised from the 0.3% previously reported. On year-on-year basis, retail sales grew 2.4%, less than the estimates of 3.4% and the former release of 3.2%.

Owing to the fall in the euro and the sterling, the dollar index rose to a two-year high against major currencies. The information significantly impacted the euro – the primary foreign currency contributing to the dollar index – as it may indicate additional interest rate reductions in the future by the European Central Bank to bolster economic growth. At 1538 IST, the dollar index, which measures the strength of the greenback against six major currencies, was at 107.57, against 107.03 on Thursday and 106.64 on Wednesday.

The Japanese yen was down 0.1% against the dollar, driven by robust domestic consumer inflation data, as concerns about heightened political uncertainty may postpone the Bank of Japan's plans for a rate increase. (Kabir Sharma)

India Rupee: In tight band as RBI's active dollar sales offset FPI outflows

NEW DELHI – The rupee remained in a tight range of 5 paise against the dollar as the Reserve Bank of India's persistent dollar sales nullified the impact of banks' dollar purchases on behalf of foreign portfolio investors and importers, dealers said. 

The central bank likely aggressively sold dollars around the 84.50 a dollar level, they said. "They (RBI) have been there since morning. 84.50 seems like a hard stop onshore," said a dealer at a private bank. 

Moreover, the central bank also deployed verbal intervention to support the currency, as the rupee hit a record low of 84.5000 a dollar earlier in the day. Informist reported Friday, citing currency dealers, that the RBI asked some banks to trim large bets against the rupee in the spot market to keep the domestic currency from falling below the key support level of 84.50 per dollar. 

Foreign and private banks bought the greenback on behalf of FPIs who continued to exit the domestic equity market, dealers said. So far in November, foreign portfolio investors have withdrawn $2.8 billion from the domestic stock market. 

Further, banks also bought the greenback on behalf of importers, who expect the rupee to depreciate further going ahead, which weighed on the Indian unit, dealers said. "FPI outflows may have slowed a little, but importers' demand (of dollars) seems good," a dealer at a state-owned bank said. 

A strong dollar index also weighed on the Indian unit, dealers said. At 1430 IST, the dollar index, which measures the strength of the greenback against six major currencies, was at 107.18, against 107.03 on Thursday and 106.64 on Wednesday.

Meanwhile, a surge in domestic equities supported the Indian unit, dealers said. At 1430 IST, both the Nifty 50 and the Sensex were 2.2% higher. 

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 84.55 a dollar. (Pratiksha)

India Rupee: Premium tad dn on rise in US ylds, bks' forward dollar sales

MUMBAI – The premium on the one-year dollar/rupee forward was a tad down, tracking a slight rise in US Treasury yields, dealers said. The benchmark 10-year US Treasury yield rose Thursday as investors assessed lower-than-expected unemployment claims data. 

The weekly initial jobless claims in the US fell by 6,000 to a seasonally adjusted 213,000, a seven-month low and below the forecast of 220,000 by economists polled by Reuters, suggesting that job growth had recovered after disruptions from hurricanes and labour strikes last month. 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 Friday, the odds of a rate cut by the Fed in December were 56.2%, down from 72.2% seen a week ago, as per the CME FedWatch tool.

The contract also fell as some banks sold dollars for forward delivery, noting the relatively higher dollar/rupee forward levels, dealers said. "The volatility is less today (Friday) than what was happening this week, some receiving is there but mostly exporters, nothing unusual," a dealer at a state-owned bank said. Premiums have risen after falling to a near three-month low of 2.06% last week.

At 1358 IST, the premium on the one-year exact-period dollar/rupee forward contract was 179.71 paise, against 182.51 paise on Thursday. On an annualised basis, the premium was at 2.13%, down from Thursday's close of 2.16%. (Kabir Sharma) 

India Rupee:Hits record low; RBI's likely dollar sales in spot, NDF mkts aid

MUMBAI – The rupee fell to a record low against the dollar Friday after opening nearly flat as the greenback surged to a 13-month high on the back of weaker-than-expected US unemployment claims data, dealers said. However, public sector banks stepped in through dollar sales, likely on behalf of the Reserve Bank of India, in both the offshore non-deliverable forwards market and the domestic spot market, which supported the rupee, they said.

"The dollar index is rising, and we can see it touching 108 very soon," a dealer at a foreign bank said. "They (RBI) will step in at every level and try to prevent a sharp fall," he said. At 0753 IST, the dollar index, which measures the strength of the greenback against six major currencies, was at 107.10, against its previous close of 107.03 on Thursday and 106.64 on Wednesday.

The central bank likely sold dollars around the 84.50 a dollar level, which supported the Indian unit, dealers said. Traders see strong technical support for the Indian currency at 84.55 a dollar.

A surge in the dollar index after the release of US jobless claims data also weighed on the rupee, dealers said. The weekly initial jobless claims fell by 6,000 to a seasonally adjusted total of 213,000, marking a seven-month low and coming in under the 220,000 forecast from economists surveyed by Reuters, suggesting that job growth has recovered after disruptions from hurricanes and labour strikes last month.

Dealers said some oil marketing companies also bought the greenback to stock up on the commodity, fearing further appreciation in its prices after they rose 2% on Thursday. Oil prices surged as tensions between Russia and Ukraine intensified, with both nations firing missiles at one another, raising concerns about crude supply if the conflict expands. 

For the rest of the day, the rupee is likely to move in a range of 84.35-84.55 against the dollar. Dealers now see strong immediate technical support for the Indian unit at 84.55 a dollar. (Kabir Sharma)

India Rupee - Asia FX: Most down as dlr surges; Philippines peso at 2-yr low

MUMBAI – Most Asian currencies were down against the dollar as the greenback surged to a 13-month high against major currencies on the back of economic data released in the US. The weekly initial jobless claims fell by 6,000 to a seasonally adjusted 213,000, marking a seven-month low and coming less than the 220,000 claims forecast by economists in a Reuters survey, suggesting that job growth has recovered after disruptions from hurricanes and labour strikes last month.

At 0909 IST, the dollar index, which measures the strength of the greenback against six major currencies, was at 107.00, against its previous close of 107.03 on Thursday and 106.64 on Wednesday.

The Taiwan dollar was down 0.1% against the dollar. Taiwan's President Lai Ching-te is set to travel to three allied Pacific Island nations at the end of this month, marking his inaugural overseas journey since assuming office, the presidential office announced on Friday.

The Indonesian rupiah was down 0.1% against the dollar. On Thursday, Indonesia's currency touched a three-month low against the dollar, as investors increasingly sold the rupiah following the central bank's decision to maintain interest rates the previous day. The move suggested a focus on bolstering the rupiah, reducing the likelihood of any policy easing.

The Philippines peso was down 0.2% against the dollar. The peso hit a two-year low against the US unit due to expectations that the central bank may opt for an interest rate cut at its upcoming meeting.

Bucking the trend, the South Korean won was up 0.1% against the dollar. On Thursday, South Korea confirmed that North Korean cybercriminals were responsible for the 2019 theft of cryptocurrency valued at 58 billion won ($41.5 million). The tokens, valued at 58 billion won at the time, are now equivalent to 1.47 trillion won.  (Kabir Sharma)

India Rupee: Expected range for rupee - Nov 22

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

(Kabir Sharma)

End

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

Edited by Saji George Titus

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