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Informist, Thursday, Nov. 28, 2024

By Gowri Lakshmi

MUMBAI - The rupee ended largely steady against the dollar Thursday amid a lacklustre trade volume as the Reserve Bank of India's persistent dollar sales intervention neutralised the impact of banks' dollar purchases for foreign portfolio investors and importers, dealers said.

"The Reserve Bank (of India) is fully intervening, they aggressively sold the dollars around 84.48 (a dollar) to prevent the rupee, but it was sure that they wouldn't let the rupee breach 84.50 (a dollar)," a dealer at a foreign bank said.

After touching its lifetime low of 84.5000 a dollar during the day, previously hit on Friday, the rupee settled at 84.4850 a dollar on Thursday. The rupee had settled at 84.4525 a dollar on Wednesday.

The rupee opened broadly unchanged against the dollar at 84.4450 a dollar. However, an hour into trading, it came under pressure as banks began purchasing dollars for foreign portfolio investors, looking to withdraw funds from the domestic markets, dealers said. "There is strong demand (of dollars) from FPIs. It may have come down from before, but still it is a lot," a dealer at a private bank said. 

So far in November, FPIs have net withdrawn $1.68 billion from Indian markets. On Thursday, both the domestic benchmark indices, the Nifty 50 and Sensex ended 1.5% lower each. 

Further, the rupee was also weighed by banks' dollar purchases on behalf of importers, who wanted to meet their month-end payment obligations, dealers said. "Importers are buying (dollars) for two reasons--they want to make payments since it is month-end, and they fear a further fall (of the rupee)," a dealer at a state-owned bank said. "But it was due to FPI outflows that the rupee fell, not the excess dollar demand from importers," the dealer added.

However, public sector banks stepped in to sell dollars likely on behalf of the central bank, to prevent the Indian unit from falling sharply below the key level of 84.50-a-dollar. Dealers said the RBI aggressively sold the greenback around 84.50 a dollar during the day. While the Indian currency touched its lifetime low of 84.5000 during the day, it could not manage to breach the key level due to the RBI's strong support.

Some banks also sold the greenback, on behalf of exporters who wanted to take advantage of the relatively higher dollar/rupee levels, which gave some cushion to the rupee. However, dealers said most exporters were in a "wait and watch" mode as they see the rupee falling past 84.50 in the coming weeks. 

Meanwhile, volume in the currency market was lower than usual as the US markets remained shut on account of Thanksgiving, dealers said. The dollar index eased on Wednesday after the US personal consumption expenditure data came in along expected lines, which aided the Indian unit, dealers said. 

The PCE price index, the US Federal Reserve's preferred gauge for inflation, climbed to 2.3% in October on a year-on-year basis from 2.1% in September. The core price index, which excludes volatile food and energy prices, rose 2.8% in the same period, from 2.7% in September, in line with analyst estimates. At 1530 IST, the dollar index, which measures the strength in the greenback against six major currencies, was at 106.22, compared with 106.02 on Wednesday and 106.87 on Tuesday. 

FORWARDS

The premium on the one-year dollar/rupee forward contract ended at its highest level in three weeks because of a fall in the benchmark 10-year US Treasury yield, dealers said. However, banks sold dollars for forward delivery, noting relatively higher levels, which capped the rise in premiums, they said.

The 10-year US Treasury yield fell on Wednesday after the US personal consumption expenditure data came in along expected lines. Premiums on forwards of a currency pair are reflective of the interest rate differential between the two countries.

At 1530 IST, the premium on the one-year exact-period dollar/rupee forward contract was 187.33 paise against 187.31 paise on Wednesday. On an annualised basis, the premium was at 2.22%, against Wednesday's close of 2.21%.

OUTLOOK

On Friday, the rupee will take cues from movement in the dollar index and crude oil prices, dealers said. Dealers expect banks to continue to buy dollars on behalf of foreign portfolio investors looking to withdraw money 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. "I think 84.50 (a dollar) will stay. RBI will need a trigger to let it go beyond that," said a dealer at another private bank. 

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

India Rupee - World FX: Yen reverses Wed gains, dn 0.5% before key econ data

MUMBAI – The Japanese yen reversed its gains from Wednesday and was down 0.5% against the dollar ahead of Tokyo consumer inflation data, due Friday, a report by FX Street said. More data, including preliminary retail sales and preliminary industrial production data, will be assessed by investors to get more cues on monetary policy decisions by the Bank of Japan at its December policy meeting.

The euro was down 0.2% against the greenback. Fall in the currency were capped after European Central Bank policymaker Isabel Schanbel pushed back the possibility of an aggressive rate cut by the central bank. Schanbel, in an interview with Bloomberg, said that the borrowing costs are nearing neutral levels and that easing too much could dissipate "valuable policy space."

The pound sterling was down 0.2% against the dollar. The dollar remained steady on Thursday after the personal consumption expenditure price index, the US Federal Reserve's preferred gauge of inflation, came in line with analyst expectations. Data published on Wednesday showed that the personal consumption expenditure price index climbed to 2.3% in October on a year-on-year basis from 2.1% in September. The core price index, which excludes volatile food and energy prices, rose 2.8% in the same period, from 2.7% in September, in line with analyst estimates. Investors assessed the data to get more cues into the future interest rate decisions by the US Fed.

At 1448 IST, the dollar index, which measures the strength in the greenback against six major currencies, was at 106.29, compared with 106.02 on Wednesday and 106.87 on Tuesday. Traders currently price in a 68.2% probability of the Fed lowering its rates by 25 basis points, while there is a 31.8% chance of the central bank maintaining status quo on rates.

The Australian dollar was down 0.1% against the greenback after data on Wednesday showed that the Australian consumer price index rose by 2.1% in October. Meanwhile, core inflation increased by 3.5% after a 3.2% increase in the previous month. According to reports, the latest data figure is unlikely to influence the interest rate decisions by the Reserve Bank of Australia in December. Tracking a fall in the Australian currency, the New Zealand dollar was down 0.1%.

The Canadian dollar was down 0.1% against the dollar as crude oil prices remained relatively low. At 1455 IST, the January Brent Crude prices on the Intercontinental Exchange was $72.67 per barrel, against its close of $72.83 per barrel on Wednesday and $72.81 per barrel on Tuesday. (Gowri Lakshmi) 

India Rupee: Stays steady amid dull volume; RBI dlr sales offset FPI outflow

MUMBAI – The rupee remained steady against the dollar amid lacklustre volume as banks sold the greenback, likely on behalf of the Reserve Bank of India, which offset the impact of banks' dollar purchases for foreign portfolio investors, dealers said. 

"Today, the movement is largely pushed by FPI outflows, importers are inactive and exporters are waiting for the rupee to breach 84.50 (a dollar), which is highly unlikely today (Thursday)," a dealer at a public-sector bank said. The rupee has moved in a range of just 5 paise so far on Thursday. 

Banks purchased the greenback on behalf of foreign portfolio investors, looking to withdraw funds from domestic markets. So far in November, foreign portfolio investors have net withdrawn $1.68 billion from Indian markets. At 1154 IST, both domestic benchmark indices, the Nifty 50 and Sensex were down 0.77% and 0.82%, respectively. 

As the rupee began inching towards its record low of 84.5000 a dollar, some public sector banks stepped in to sell dollars, likely on behalf of the RBI, dealers said. "RBI is selling (dollars), but is only moderate and not aggressive, they're protecting the rupee and there is high support at 84.48000 (a dollar)," a dealer at a state-owned bank said. The rupee has touched a low of 84.4900 a dollar so far in the day. 

Meanwhile, volume in the currency market remained lacklustre as the US financial markets are shut on account of Thanksgiving Day, according to dealers. For the rest of the day, the rupee is likely to move in a range of 84.35-84.50 against the dollar. Dealers see strong immediate technical support for the Indian unit at 84.50 a dollar. (Gowri Lakshmi)

India Rupee: Technical Levels for rupee - Nov 28

MUMBAI – At 0900 IST, the rupee was at 84.4450 a dollar, against its previous close of 84.4525. At 1105 IST, the rupee was at 84.4700 per dollar. The following are the key support and resistance levels for the rupee as provided by leading banks and brokerages:

(Sourabh Kumar and Pratiksha)

India Rupee: Steady amid lacklustre trade volume due to Thanksgiving holiday

MUMBAI – The rupee was steady against the dollar Thursday due to lacklustre trade volume, as financial markets in the US were shut on account of Thanksgiving holiday. "The rupee will remain range-bound at 84.4400-84.4800 a dollar, trade volumes are low, there isn't much movement expected today (Thursday)," a dealer at a state-owned bank said. 

The dollar index remained largely steady after the personal consumer expenditures data aligned with market forecasts. On Wednesday, the US Federal Reserve's preferred inflation gauge, the PCE price index, climbed to 2.3% in October on a year-on-year basis, from 2.1% in September. The core price index, which excludes volatile food and energy prices, rose 2.8% in the same period, from 2.7% in September, in line with analyst estimates. Investors assessed the data to get more cues into the future interest rate decisions by the US Fed.

At 0934 IST, the dollar index, which measures the strength of the greenback against six major currencies, was at 106.23, compared to 106.02 on Wednesday and 106.87 on Tuesday. Traders currently price in a 68.2% probability of the Fed lowering its rates by 25 basis points, while there is a 31.8% chance of the central bank maintaining status quo on rates.

Dealers said, the rupee will likely not breach the key level of 84.5000 a dollar during the day due to low trade volume. However, if the rupee is inching toward the key level, banks expect the Reserve Bank of India to step in with its dollar sales, to prevent the rupee from falling sharply and to curb any sudden volatility in the market. Dealers also expect some exporters to sell the dollars to take advantage of the higher dollar/rupee levels, which will aid the rupee. 

During 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 84.48 a dollar. (Gowri Lakshmi)

India Rupee - Asia FX: Most up; South Korean won dn post rate cut

MUMBAI – Most Asian currencies rose against the dollar. The South Korean won fell nearly 0.3% after Bank of Korea cut interest rates by 25 basis points, in a move that surprised the market. The consensus amongst market participants was that the central bank would keep rates unchanged.

The dollar index was steady as US data released Wednesday was on expected lines. The personal consumption expenditures price index rose 0.2% on month and 2.3% on year in October, on expected lines. On an annual basis, the index exceeded the 2.1% mark seen in September. Excluding food and energy, core inflation rose by 0.3% on a monthly basis and 2.8% on a yearly basis, meeting economists' predictions. US GDP expanded 2.8% in Jul-Sept, as per market estimates. However, the reading was lower than the 3% rise in Apr-Jun.

The Philippines peso was unchanged against the greenback. While accepting that the peso may fall to fresh record lows, the governor of the Philippines central bank told Bloomberg in an interview on Wednesday that it would ensure the peso's fall is not abrupt.

The Taiwan dollar and the Malaysian ringgit were steady against the US currency. The Thai baht was up 0.2% against the greenback as reports suggested that the Thai government was pondering over a white paper enumerating steps to revitalise the economy in the hope of achieving 3% growth in 2025.  (Sourabh Kumar)

India Rupee: Expected range for rupee - Nov 28

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:

(Sourabh Kumar 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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