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Informist, Friday, Nov. 29, 2024

By Sourabh Kumar

MUMBAI – The rupee settled steady against the dollar as the Reserve Bank of India likely sold dollars to offset the downward pressure from importers' purchase of the greenback, dealers said. They said importers bought dollars to meet their month-end payment requirements.

"There was pressure on the rupee from importers, but the central bank was there to make sure it (rupee) does not fall much," a dealer with a state-owned bank said. The rupee moved in just a 2-paise range throughout the day. Last time the Indian currency traded in such a thin band was Nov. 14. The Indian rupee settled at 84.4825 a dollar against Thursday's close of 84.4850 a dollar.

The rupee opened steady at 84.4800 a dollar, and quickly came under pressure from importers' dollar demand. Oil marketing companies also bought dollars, which weighed on the rupee, dealers said. They said oil companies demanded the greenback on fears of a rise in crude oil prices.

A rise in crude oil prices pushes India's import bill higher, given the commodity is a major import item for the country. Oil prices rose Thursday and early Friday after Israel and Lebanon accused each other of violating the ceasefire agreement reached Wednesday. At 1530 IST, the January Brent Crude price on the Intercontinental Exchange was at $73.01 per barrel against its close of $73.28 per barrel on Thursday and $72.83 per barrel on Wednesday. 

With pressure from importers, the Reserve Bank of India likely sold dollars to prevent the rupee from hitting a fresh record low, dealers said. "We thought it (rupee) would go beyond 83.50 to about 83.55 today (Friday), but the RBI was there," a dealer with another state-owned bank said. "I think the rupee got a breather since equities did not bleed today." The Sensex and the Nifty 50 ended up nearly 1.0% each on Friday.

With such pressure, the domestic currency touched a low of 84.50 a dollar in the day. However, the rupee did not fall beyond this level, thanks to the intervention by the RBI, dealers said. The rupee had hit a record low of 84.50 a dollar on Nov. 22. 

A fall in the dollar index supported the rupee, dealers said. The dollar index fell after the US currency came under pressure from a strengthening Japanese yen. The yen carries a weightage of 13.6% on the dollar index. The yen rose against the dollar as inflation in Japan was higher than expectations.

The Tokyo core CPI, which excludes fresh food costs, rose 2.2% on year in November, higher than the forecast of a 2.1% rise, and above the 1.8% increase in October. The data bolstered chances of a rate hike by the Bank of Japan next month. The Japanese central bank is expected to raise rates by 25 basis points in December, as per a Reuters poll. 

The index, which measures the strength of the greenback against a basket of six major currencies, was at 105.94 at 1530 IST against 106.15 on Thursday and 106.02 on Wednesday. The trade volume in the domestic market was lower because of the Thanksgiving holiday in the US on Thursday. A fall in the dollar index is likely to support the rupee, dealers said. 

FORWARDS

The premium on the one-year dollar/rupee forward contract ended at its highest level in three weeks because the benchmark 10-year US Treasury yield fell in early European trade, dealers said. Financial markets in the US were closed on Thursday for Thanksgiving.

Market participants awaited fresh cues to assess the interest rate trajectory in the US, dealers said. On Monday, the US manufacturing purchasing managers' index for November will be released. The US jobs data for October will be released Tuesday. This week, the one-year dollar/rupee forward premium has risen about 7 basis points. It tracked the fall in the benchmark 10-year US Treasury yield, which fell 16 bps during the same period to 4.25% on Wednesday. 

Most dealers said the one-year forward premium may rise to around 2.28%, a level seen in early November. At 1530 IST, the premium on the one-year exact-period dollar/rupee forward contract was 188.11 paise against 187.33 paise on Thursday. On an annualised basis, the premium was at 2.23%, against Thursday's close of 2.22%.

OUTLOOK

The market is closed on Saturday. On Monday, the rupee will take cues from movement in the dollar index and crude oil prices, dealers said. Dealers 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.

Any escalation in the Israel-Lebanon war may drive crude oil prices up, prompting oil marketing companies to purchase dollars, dealers said. "I think it (rupee) will breach 84.50 a dollar next week. But the central bank's intervention is likely to limit the fall," a dealer with a private bank said. On Monday, 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 surges 1% on BoJ rate hike bets after Tokyo CPI

India Rupee - World FX: Yen surges 1% on BoJ rate hike bets after Tokyo CPI

NEW DELHI – The Japanese yen surged 1.0% against the dollar, hitting a near six-week high, after higher-than-expected inflation in Tokyo, Japan's capital, led to expectations of an imminent rate hike by the Bank of Japan. Data released Friday showed the Tokyo core CPI, which excludes volatile fresh food costs, rose 2.2% in November on year, exceeding expectations of a 2.1% gain and accelerating from a 1.8% increase in October. 

The Japanese central bank is expected to raise rates by 25 basis points in December, as per a Reuters poll. The yen also got a boost on account of safe-haven flows amid US President-elect Donald Trump's broad tariff warnings to Mexico, Canada, and China earlier this week.

The dollar index declined, tracking gains in the Japanese currency. At 1620 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 105.95, against 106.15 Thursday and 106.02 Wednesday.

The euro rose 0.1% against the dollar after data released Friday showed inflation in the eurozone climbed above the European Central Bank’s 2% target in November. Consumer prices rose 2.3% from a year ago, up from 2% in October and matching the median estimate in a Bloomberg survey. The data have led to some uncertainty about chances of a rate cut by the ECB next month.

The pound sterling was flat against the greenback, while the Australian dollar rose 0.1% after Reserve Bank of Australia Governor Michele Bullock said Thursday that monetary policy must remain restrictive until inflation returns sustainably to the central bank’s 2-3% target range. "Despite the decline, there is still some way to go to return inflation sustainably within our 2-3% target range," she said.  (Pratiksha)

India Rupee: Premium steady as mkt awaits US data for Fed rate cut path cues

MUMBAI - The premium on the one-year dollar/rupee forward contract was steady as market participants waited for fresh cues to assess the interest rate trajectory in the US, dealers said. "The movement in the premium is not very clear," a dealer with a state-owned bank said. "Right now, people are waiting for next week's data points from the US. 

On Monday, the US manufacturing purchasing managers' index for November will be released. "Even jobs data is something we are looking at to assess the rate cuts in the US," the dealer said. The US jobs data for October will be released on Tuesday. 

This week, the one-year dollar/rupee forward premium has risen about 7 basis points. It tracked the fall in the benchmark 10-year US Treasury yield, which fell 16 bps during the same period to 4.25% on Wednesday. The US financial markets were closed on Thursday for Thanksgiving. Dealers said with the US Federal Open Market Committee meeting scheduled next month, where the market expects a 25 bps rate cut, the forward premium is expected to remain relatively higher. The odds of a rate cut in December were seen at 66.3% as of Friday, and the rest of the chances were seen for maintaining the status quo.

Most dealers said the one-year forward premium may rise to around 2.28%, a level seen in early November. The rise in premiums, however, is expected to be capped as market participants did not see the US-India interest rate differential rising as much as was expected before Donald Trump's victory. Investors were sceptical of an aggressive rate cut by the Fed going forward on account of Trump winning the US presidential elections.

Due to expectations of imposition of multiple tariffs by the Trump administration once it assumes power, US inflation is also expected to see some upward risk. Therefore, the quantum and pace of rate cuts by the Fed were seen lower and slower, respectively, dealers said.

At 1346 IST, the premium on the one-year exact-period dollar/rupee forward contract was 188.38 paise against 187.33 paise on Thursday. On an annualised basis, the premium was at 2.23% against Thursday's close of 2.22%.  (Sourabh Kumar)

India Rupee: In tight band; RBI's active dollar sales prevent lifetime low

NEW DELHI - The rupee remained in a tight range against the dollar Friday as the Reserve Bank of India's active intervention through dollar sales countered the pressure emanating from banks' greenback purchases on behalf of importers and foreign portfolio investors, dealers said. The rupee has moved in a range of just 2 paise so far in the day. 

The central bank marked its presence in the domestic spot market by selling dollars around 84.49 a dollar, shortly after the market opened, dealers said. The RBI's greenback sales are seen aimed at keeping the rupee from falling below the key level of 84.50 a dollar and hitting a record low, they said. The rupee touched a record low of 84.5000 a dollar on Thursday. 

"I think the 84.50 (a dollar) level is sacrosanct for now. We are seeing a lot of resistance there. I don't think they (RBI) will let it break easily, at least not today," a dealer at a private bank said. 

Meanwhile, banks purchased the greenback on behalf of oil and other importers, looking to meet their month-end payment requirements, which kept the Indian currency under pressure, dealers said. Further, some foreign banks also bought the greenback on behalf of FPIs, looking to withdraw funds from the domestic market, weighing on the Indian unit, they said. 

FPIs pulled out over $11 billion from Indian markets last month. While foreign outflows have continued this month as well, the pace has slowed. So far this month, FPIs have net withdrawn $1.6 billion from domestic markets. 

The dollar index, which measures the strength of the greenback against a basket of six major currencies, fell further during European trade, tracking a surge in the Japanese yen, which also aided the Indian unit, dealers said. The yen rose sharply after faster-than-expected inflation in Japan supported bets for an interest rate hike by the Bank of Japan next month. At 1315 IST, the dollar index was at 105.64 against 106.15 on Thursday and 106.02 on Wednesday.

For the rest of the day, the rupee is likely to move in a range of 84.40-84.55 against the dollar. Dealers see strong immediate technical support for the Indian unit at 84.50 a dollar.  (Pratiksha)

India Rupee: Technical Levels for rupee - Nov 29

MUMBAI – At 0900 IST, the rupee was at 84.4800 a dollar, against its previous close of 84.4850. At 1011 IST, the rupee was at 84.4900 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 as RBI sells dlrs to offset demand from importers, FPIs

MUMBAI – The rupee was steady in early trade as banks sold dollars, likely on behalf of the the Reserve Bank of India, to offset the demand for the greenback from importers as well as overseas investors who pulled their money out of domestic equity markets. The central bank also intervened to prevent the rupee from falling and hitting a fresh record low, dealers said.

"FPI outflows are putting a lot of pressure on rupee right now, and today (Friday) there is buying pressure from traders as well," a dealer with a private bank said. "Since it (rupee) is near a record low, we are seeing some RBI action, but I still think the rupee may touch 55 (84.55 a dollar) today."

Apart from foreign fund outflows, importers purchased the greenback for their month-end payment needs. Oil marketing companies also purchased dollars, fearing a further rise in crude oil prices. "The demand is also higher because the US market was closed on Thursday," a dealer with a foreign bank said.

Crude oil prices were up, which weighed on the rupee, dealers said. A rise in oil prices pushes India's import bill higher, given the commodity is a major import item for the country. Oil prices rose after Israel and Lebanon accused each other of violating the ceasefire agreement reached the previous day. At 0930 IST, the January Brent Crude price on the Intercontinental Exchange was $73.29 per barrel, against its close of $73.28 per barrel on Thursday and $72.83 per barrel on Wednesday. 

The RBI came to the rupee's support by selling dollars to prevent it from hitting another lifetime low. The rupee had hit a record low of 84.50 a dollar on Nov. 22. With continued pressure on the rupee, the domestic currency touched this record low level on Thursday. 

A fall in the dollar index also supported the rupee, dealers said. The index fell due to a strengthening Japanese yen. The Japanese currency, which carries a weightage of 13.6% in the dollar index, rose 0.8% against the US dollar. The yen strengthened on heightened expectations of a rate hike by the Bank of Japan next month, after the latest inflation data from the far east nation came higher than expected. The index, which measures the strength of the greenback against a basket of six major currencies, was 105.86 at 0933 IST against 106.15 on Thursday and 106.02 on Wednesday. 

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.  (Sourabh Kumar)

India Rupee - Asia FX: Most up on weak dollar after hotter-than-view Tokyo CPI

MUMBAI – Most Asian currencies rose against the dollar after the release of inflation data from Japan. The yen surged after inflation in Japan for November rose higher than expectations, leading to a fall in the dollar index. The Japanese yen holds the second-highest weightage of 13.6% in the dollar index. The index, which measures the strength of the greenback against a basket of six major currencies, was at 105.86 at 0824 IST against 106.15 on Thursday and 106.02 on Wednesday.

Tokyo's headline inflation rate surged to 2.6% in November, bouncing back from 1.8% in October. Core inflation, which excludes fresh food prices, increased to 2.2% against an anticipated 2.1% by a Reuters survey. The inflation numbers from Tokyo are commonly seen as reflecting overall trends across Japan.

The higher-than-view inflation data makes the case for a rate hike in the Bank of Japan's meeting in December even stronger. Governor Kazuo Ueda has said multiple times that borrowing costs will increase if the economy meets the central bank's expectations.

The Malaysian ringgit was up 0.3% against the dollar. The country's producer price index, a metric which measures prices of goods at the producer level, fell by 2.4% in October, its steepest decline since June 2023, after easing 2.1% in the last month.

The Indonesian rupiah was up 0.1% against the dollar after clouds of uncertainty around the country's political scenario cleared. Candidates backed by new Indonesian President Prabowo Subianto look set to secure victories in key regional elections, except Jakarta, which should make it easier to implement and reinforce his political moves and agendas, according to reports. 

The South Korean won traded flat against the dollar. In South Korea, industrial production rose 2.3% on year in October, against a decline of 1.3% in September, data showed on Friday. The won has been struggling since Thursday after the Bank of Korea cut interest rates by 25 basis points, in a move that surprised the market.  (Kabir Sharma)

India Rupee: Expected range for rupee - Nov 29

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:

(Sourabh Kumar and Pratiksha)

End

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

Edited by Tanima Banerjee

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