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Informist, Wednesday, Nov. 27, 2024

 

By Gowri Lakshmi

 

MUMBAI – The rupee ended lower against the dollar Wednesday as banks purchased the greenback on behalf of importers and foreign portfolio investors, dealers said. Banks' dollar buys ahead of the expiry of front-month currency futures and options contract also weighed on the Indian unit, they said. 

 

However, public-sector banks sold the greenback, likely on behalf of the Reserve Bank of India, which prevented the local unit from hitting a record low, dealers said. The rupee had hit a lifetime low of 84.5000 a dollar on Friday. 

 

"The RBI was seen selling (dollars) today, but they (RBI) weren't as aggressive as they can be. They were just selling actively whenever it (rupee) inched toward 84.50 (a dollar)," a dealer at a private bank said.

 

After depreciating 0.2% against the dollar, the rupee settled at 84.4525 a dollar on Wednesday, against the previous close of 84.3275.

 

The rupee opened slightly lower against the dollar at 84.3875 against the dollar, and came under further pressure as importers rushed to buy the greenback to meet their month-end payment obligations. "Buy (dollars) on dips (in dollar/rupee) was the mantra for today," a dealer at a private bank said.

 

Moreover, banks bought dollars to cover their existing short dollar bets ahead of the expiry of front-month currency futures and options contracts, which weighed on the Indian unit, dealers said. "There was a lot of pressure (on the rupee) due to the futures expiry today," said a dealer at a private bank. "But this was only in the first half of the session."

 

The rupee was also weighed by banks' greenback purchases on behalf of foreign portfolio investors, looking to withdraw funds from Indian markets, dealers said. So far in November, FPIs have net withdrawn $2.38 billion from the domestic market.

 

 

 

 

 

Further, the dollar index remained broadly strong, which also exerted pressure on the rupee, according to dealers. The dollar index, which measures the strength of the dollar against six major currencies, rose to a high of 106.92 during the day, against its previous close of 106.87 on Tuesday and 106.83 on Monday.

 

 

Most market participants remained cautious ahead of key economic data from the US. The Federal Reserve's preferred gauge of inflation, the personal consumption expenditure data, due later in the day, will draw investors' focus and is likely to be assessed to get further cues about the future interest rate cut decisions by the US Fed. Traders currently price in a 66.3% probability of the Fed cutting rates by 25 basis points and a 33.7% chance of the central bank maintaining a status quo.

 

However, as soon as the rupee inched closer to its record low, some public-sector banks stepped in with dollar sales, likely on behalf of the RBI, dealers said. The RBI likely sold the greeback around 84.47 a dollar, they said. 

 

Some foreign banks also sold dollars on behalf of exporters who wanted to take advantage of the relatively higher dollar/rupee levels, which aided the domestic unit, dealers said. "Exporters were waiting for the rupee to fall, for the past two days they couldn't sell (dollars), but today most sold dollars but some still waited hoping the rupee will fall below 84.50 a dollar," a dealer at a state-owned bank said.

 

	AT 1530 IST	AT 0900 IST	HIGH	LOW	PREVIOUS(AT 1530 IST)
Spot rupee per $1	84.4525	84.3875	84.3875	84.4750	84.3275
1-year dlr/rupee fwd (paise)	187.31	185.81	188.81	184.30	185.81

 

FORWARDS

Premiums on the one-year dollar/rupee forward contract ended slightly higher on Wednesday, tracking an intraday fall in the benchmark 10-year US Treasury note ahead of the release of US personal consumption expenditures data for October later in the day, dealers said. Premiums on forwards of a currency pair are reflective of the interest rate differential between the two countries. 

 

The US personal consumption expenditure index is seen at 2.3% on year in October from 2.1% in September, according to a poll by Dow Jones. This measure is preferred by the Federal Reserve and guides its decisions on monetary policy.

 

At 1530 IST, the premium on the one-year exact-period dollar/rupee forward contract was 187.31 paise, against 185.81 paise on Tuesday. On an annualised basis, the premium was at 2.21%, against Tuesday's close of 2.19%. 

 

OUTLOOK

On Thursday, the rupee will take cues from movement in the dollar index after the release of the US personal consumption expenditures data for October later in the day, dealers said. The local unit may also take cues from movement in crude oil prices, they said. 

 

"We can expect the rupee to be falling in the coming weeks because the inflow through MSCI is done and dollar is expected to strengthen after the data figures are released this week," a dealer at a state-owned bank said.

 

Dealers expect banks to continue to buy dollars on behalf of foreign portfolio investors looking to withdraw from Indian markets, which is expected to weigh on the rupee. However, they expect the RBI to continue intervening in the market through dollar sales to prevent the rupee from falling sharply and to curb any sudden volatility.

 

During the day, the rupee is seen in a range of 84.35-84.50 a dollar, with strong technical resistance pegged at 84.50 a dollar.

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India Rupee - World FX: New Zealand dlr up 0.9% after central bank decision

 

	AT 1458 IST	HIGH	LOW	PREVIOUS
GBP/USD	1.2596	1.2616	1.2567	1.2569
EUR/USD	1.0512	1.0541	1.0474	1.0486
NZD/USD	0.5886	0.5901	0.5828	0.5834
AUD/USD	0.6485	0.6501	0.6463	0.6473
USD/JPY	151.7100	153.2320	151.4340	153.0670
USD/CAD	1.4056	1.4078	1.4035	1.4049
EUR/JPY	159.4870	160.7008	159.2430	160.5700
CHF/USD	1.1320	1.1345	1.1272	1.1275
EUR/CHF	0.9286	0.9308	0.9278	0.9296

 

MUMBAI – The New Zealand dollar was up 0.9% against the US dollar after the Reserve Bank of New Zealand cut its interest rate by 50 basis points, against a widely expected cut of 75 bps. "The (Monetary Policy) Committee agreed that a 50 basis point cut is consistent with their mandate of maintaining low and stable inflation, while seeking to avoid unnecessary instability in output, employment, interest rates, and the exchange rate," the minutes of the committee's meeting noted. "If economic conditions continue to evolve as projected, the Committee expects to be able to lower the OCR (official cash rate) further early next year,” it added.

 

The Japanese yen was up 0.8% against the dollar on safe-haven inflows, after US President-elect Donald Trump Tuesday vowed to impose a 25% tariff on all imports from Canada and Mexico and an additional 10% tariff on all imports from China. However, traders remained cautious as uncertainty over the Bank of Japan's interest rate decision at its December policy meeting looms.

 

The pound sterling was up 0.2% against the greenback after data showed consumer confidence in the UK rose to 111.8, from 108.7 previously. However, gains in the currency were limited after another data set, CBI Realized Sales, showed that the business situation fell at the fastest pace in November, to 18 points, against analysts' forecast of a 14-point fall.

 

The euro was up 0.1% against the dollar. Gains in the currency were capped after Germany's GFK Consumer Climate Index fell to 18.8, against the forecast of 18.3.

 

The dollar was firm Wednesday, after the dollar index rose to a high of 107.50 Tuesday, as traders remain cautious ahead of the US Personal Consumption Expenditures Price Index, the US Federal Reserve's preferred inflation gauge, due later in the day. Economists expect that the index rose 0.2% on month in October and 2.3% on year, according to FactSet’s consensus estimates. Core personal consumption expenditures inflation, which excludes volatile food and energy prices, is expected to have risen 0.29% on a monthly basis and 2.8% on an annual basis.

 

Market participants also assessed the minutes of the US Federal Open Market Committee's meeting in November, released earlier Wednesday. "In discussing the outlook for monetary policy, participants anticipated that if the data came in about as expected, with inflation continuing to move down sustainably to 2% and the economy remaining near maximum employment, it would likely be appropriate to move gradually toward a more neutral stance of policy over time," the minutes said.

 

Traders currently price in a 66.5% probability of the Fed cutting rates by 25 basis points and a 33.5% chance of the central bank maintaining the status quo. At 1456 IST, the dollar index, which measures the strength of the dollar against six major currencies, was 106.54, compared to its close of 106.87 on Tuesday and 106.83 on Monday.  (Gowri Lakshmi)

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India Rupee: Stays down as importers, FPIs buy dollars; RBI prevents sharp fall

 

	AT 1326 IST	AT 0900 IST	HIGH	LOW	PREVIOUS (AT 1530 IST)
Spot rupee per $1	84.4325	84.3875	84.3875	84.4750	84.3275

 

MUMBAI – The rupee remained down against the dollar as banks continuously purchased the greenback on behalf of importers looking to meet their month-end payment obligations, dealers said. However, some state-owned banks sold the greenback, likely on behalf of the Reserve Bank of India, which limited the fall of the rupee, they said.

 

"There was a lot of resistance today. In the morning, there was resistance at 84.4200 a dollar, then when it breached it was 84.4500. Now it is 84.4800 a dollar. If that breaches, we can see the rupee falling easily below 84.5000 a dollar, though intense selling (of dollars) is expected at that level," a dealer at a public sector bank said.

 

Banks also purchased dollars on behalf of foreign portfolio investors, looking to withdraw funds from the domestic equity market, which weighed on the local currency, dealers said. So far in November, FPIs have withdrawn $2.38 billion from the domestic market.

 

Further, banks bought dollars to cover their existing short dollar bets ahead of the expiry of front-month currency futures and options contract, which weighed on the Indian unit, dealers said.

 

However, state-owned banks stepped in through dollar sales around 84.47 a dollar, likely on behalf of the RBI, which prevented the rupee from falling sharply and hitting a lifetime low, dealers said. The Indian currency had hit a lifetime low of 84.5000 a dollar on Friday. Some banks also sold the greenback on behalf of exporters to take advantage of the relatively higher dollar/rupee levels, which aided the Indian unit, they said.

 

Market participants remain cautious ahead of the release of US personal consumer expenditure data, the Federal Reserve's preferred inflation measure, due later in the day, for more cues on the US central bank's policy easing cycle. Traders have priced in a 66.5% chance of the US Fed lowering its benchmark rates by 25 basis points at its December policy meeting, while there's a 33.5% chance of the Fed maintaining status quo, according to the CME FedWatch tool.

 

For the rest of the day, the rupee is likely to move in a range of 84.35-84.55 against the dollar. Dealers 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 27

 

MUMBAI – At 0900 IST, the rupee was at 84.3875 a dollar, against its previous close of 84.3275. At 1147 IST, the rupee was at 84.4650 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	84.55	84.50	84.30	84.25
Brokerage firm	84.70	84.50	84.35	84.20
Brokerage firm	84.60	84.50	84.20	84.00

 

(Pratiksha)

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India Rupee: Down as banks purchase dollars for importers, FPI outflows

 

	AT 0944 IST	AT 0900 IST	HIGH	LOW	PREVIOUS (AT 1530 IST)
Spot rupee per $1	84.4425	84.3875	84.3875	84.4450	84.3275

 

MUMBAI – The rupee was down against the dollar Wednesday as banks purchased dollars on behalf of importers, dealers said. Some banks also bought the greenback, likely for foreign portfolio investment outflows from domestic equities, they said. 

 

"The rupee is falling today (Wednesday) as most buying pressure is from importers. It is month-end, so importers are purchasing to meet month-end obligations," a dealer at a state-owned bank said. "There are also outflows, so that is also putting the rupee under pressure," he added.

 

The rupee came under downward pressure as banks purchased the greenback on behalf of overseas investors looking to withdraw funds from the domestic equity market, dealers said. So far in November, foreign portfolio investors have net sold $2.38 billion from the Indian stock market. "Whatever inflows from MSCI had been factored in for the last two days, now it will mostly be selling and profit booking," a dealer at a public sector bank said.

 

The dollar index was also steady after rising to 107.50 on Tuesday. Traders remained cautious ahead of the release of key US economic data which will help them get more cues on the monetary policy decision by the US Federal Reserve at its upcoming policy meeting. The personal consumption expenditure data, due later in the day, is the Fed's preferred inflation measure and will be scrutinised ahead of the central bank's December policy meeting. Analysts estimate that the total personal consumption expenditure price index in October rose 0.2% on month, while core PCE inflation is expected to rise 0.29%.

 

Traders have currently priced in a 64.7% probability of the Fed lowering its benchmark rates by 25 basis points at its December meeting, while there's a 35.3% chance of the central bank maintaining the status quo. At 0938 IST, the dollar index, which measures the strength of the dollar against six major currencies, was 106.86, against its previous close of 106.87 and 106.83 on Monday. 

 

However, some banks sold the greenback, on behalf of exporters who wanted to take advantage of the higher dollar/rupee levels, which aided the rupee, dealers said. "They have been waiting for the last two days since the rupee rose a bit, but today, they are definitely selling, the rupee will fall as much as 84.4500 a dollar mostly," a dealer at a state-owned bank said.

 

Dealers said the Reserve Bank of India may sell dollars to curb runaway depreciation in the unit. For the rest of the day, the rupee is likely to move in a range of 84.35-84.50 against the dollar. Dealers now 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 as dollar remains steady; US inflation data eyed

 

MUMBAI – Asian currencies were mixed against the dollar as the greenback remained steady on caution ahead of the release of US personal consumption expenditures data for October. The personal consumption expenditures data is the US Federal Reserve's preferred inflation measure and guides its decisions on monetary policy. 

 

In October, economists expect that the overall PCE Price Index will rise 0.2% on a monthly basis and 2.3% on an annual basis, according to FactSet's consensus estimates. Core PCE inflation, which excludes volatile food and energy prices, is expected to rise 0.29% on a monthly basis and 2.8% on an annual basis. 

 

The Philippines peso was up 0.2% against the dollar. The peso fell to a record low of 59 peso a dollar on Tuesday. The Bangko Sentral ng Pilipinas, the country's central bank, earlier said that the peso's depreciation was not because of its weakness but strength in the US dollar. With the US Federal Reserve seen as unlikely to speed up interest rate cuts, the dollar has strengthened against many other currencies.

 

The South Korean won was largely unchanged against the dollar. The Bank of Korea will hold its key policy rate at 3.25% this week to support the Korean won against a strong dollar, according to a majority of economists in a Reuters poll, who forecast at least three rate cuts next year.

 

The Indonesian rupiah was down 0.4% against the dollar. The Chinese yuan was down 0.1% against the greenback.  (Kabir Sharma)

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India Rupee: Expected range for rupee - Nov 27

 

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

 

PARTICIPANTS	SUPPORT	RESISTANCE
Foreign bank	84.45	84.25
Foreign bank	84.40	84.20
Brokerage firm	84.38	84.25
Brokerage firm	84.45	84.25

 

 

 

 

 

 

 

(Pratiksha and Kabir Sharma)

 

End

 

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

 

Edited by Akul Nishant Akhoury

 

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