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Informist, Wednesday, Dec. 4, 2024

By Pratiksha

NEW DELHI – The rupee settled at a record closing low against the dollar on Wednesday owing to dollar purchases by banks on behalf of importers and a rise in the dollar index, dealers said. However, dollar sales by banks, likely for foreign portfolio investors and the Reserve Bank of India limited losses for the Indian unit, they said. "FPIs seem to be returning. We saw some selling (of dollars) for FPIs, which kept it (the rupee) in a small range," a dealer at a private bank said. 

After moving in a range of 10 paise during the day, the Indian currency settled at 84.7400 a dollar on Wednesday, against its previous close of 84.6850 a dollar. However, other Asian currencies rose 0.1-1.0% against the greenback, with the South Korean won being the best performer.

While other Asian currencies benefitted from a rise in the offshore Chinese yuan, the Indian unit emerged as the worst performer among its Asian peers.

The Chinese yuan rose against the dollar on Wednesday, after hitting a 13-month low on Tuesday, following firmer guidance by the People's Bank of China. 

The rupee started the day broadly unchanged at 84.6900 a dollar, but rose to the day's high of 84.6450 a dollar shortly afterwards, as foreign banks sold dollars on behalf of foreign portfolio investors, looking to invest in Indian markets, dealers said. 

After pulling out almost $13 billion worth of funds from domestic markets in the last two months, FPIs have turned net buyers this month. So far in December, FPIs have net infused $863.5 million into domestic markets.  

As soon as the local unit touched its day's high, banks rushed to buy dollars on behalf of importers, to take advantage of the relatively lower dollar/rupee levels, dealers said. This weighed on the Indian unit.  

"The fall in the rupee has been pretty quick. This has caught importers off guard. At least for the near term payments, importers have started buying (dollars)," a dealer at a state-owned bank. The rupee has depreciated 0.3% against the dollar so far this month. 

As the rupee came under pressure, the RBI likely stepped in to intervene through dollar sales, in order to prevent further losses in the Indian unit, dealers said. "I think they (RBI) will hold it (rupee) around 84.75-84.80 for some time. At least that is what it looks like from the actions," said a dealer at another private bank. 

Further, a rise in the dollar index during the last leg of the trade also weighed on the Indian unit, dealers said. The dollar index edged higher ahead of remarks from US Federal Reserve Chair Jerome Powell later in the day. The index also rose as US job openings in October came in higher than expected. Data released Tuesday showed job openings in the US rose 372,000 to 7.7 million in October, more than the forecast of 7.5 million by a Dow Jones poll.

At 1530 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 106.50 against 106.34 on Tuesday and 106.38 on Monday.

A rise in crude oil prices also weighed on the Indian unit, according to dealers. Crude prices rose on Wednesday on expectations that the Organization of the Petroleum Exporting Countries and its allies may announce an extension to supply cuts this week and as geopolitical tensions in West Asia continued to rise. 

At 1530 IST, the February Brent crude oil contract on the Intercontinental Exchange was at $74.17 per barrel, against its close of $73.62 per barrel on Tuesday and $71.83 per barrel on Monday. 

FORWARDS

Premiums on the one-year dollar/rupee forward contract settled at an over four-month low as the Reserve Bank of India likely sold dollars for six- to one-year forward delivery on Wednesday, dealers said. The RBI's forward dollar sales were likely in order to nullify its spot interventions and avoid pushing out rupee liquidity, they said. 

The RBI had heavily sold forward dollars for one- to three-month forward delivery on Monday and Tuesday, Informist reported on Tuesday, citing currency dealers. A buy-sell swap entails buying dollars for immediate delivery and entering into a contract to sell these at a future date.

Liquidity conditions had worsened significantly at the beginning of last month primarily due to the central bank's intervention in the spot market. Though liquidity was in a surplus of INR 1 trillion on Tuesday, it is expected to fall back into deficit in the coming days, dealers said. 

Forward premiums also fell due to a rise in US Treasury yields, dealers said. US yields rose after US job openings in October came in higher than expected. Premiums on forwards of a currency pair are reflective of the interest rate differential between the two countries.

Meanwhile, some banks bought dollars for forward delivery on behalf of importers who wanted to take advantage of the relatively lower levels, dealers said. This aided the forward premiums. 

Market participants now await the outcome of the three-day Monetary Policy Committee's meeting, due on Friday. The rate-setting panel is expected to keep the policy repo rate at 6.50% for the 11th meeting in a row, according to an Informist poll. They also await the key monthly US jobs report, due on Friday, for further cues on the Federal Reserve's rate cut cycle.

At 1530 IST, the premium on the one-year exact-period dollar/rupee forward contract was 168.41 paise, against 168.88 paise on Tuesday. On an annualised basis, the premium was at 1.98% against Tuesday's close of 1.99%. Premium fell to 1.95% during the day, its lowest level since Aug. 5.

OUTLOOK

On Thursday, the rupee will take cues from movement of the dollar index after Powell's speech at the New York Times DealBook Summit in New York later in the day, dealers said. The US services Purchasing Managers' Index and the private payrolls report are also due later Wednesday.

The local unit will also take cues from movement in crude oil prices and the offshore Chinese yuan, they said. The central bank is expected to continue intervening through dollar sales to prevent the rupee from falling sharply and to avert excessive volatility, they said. 

"They have been intervening everywhere--NDF, spot, futures, everywhere. So I don't think they will allow 85.00 (a dollar) that easily, but it is inevitable after a point," said a dealer at a state-owned bank. 

Dealers expect importers to continue purchasing dollars in fear of a further depreciation in the rupee, which may pressure the Indian currency, dealers said. The rupee is seen in a range of 84.60-84.85 a dollar, with strong technical support pegged at 84.80 a dollar.

India Rupee - World FX: Australian dollar slumps on weaker-than-expected GDP

NEW DELHI – The Australian dollar fell 0.8% to a four-month low against the US dollar, as weaker-than-expected economic growth raised expectations that the Reserve Bank of Australia may cut interest rates early in 2025.

In Jul-Sept, Australia's economy grew at the slowest annual pace since the COVID-19 pandemic. Data released Wednesday showed GDP grew 0.8% year-on-year in the September quarter from 1.0% the previous quarter and against expectations of 1.1% growth. The New Zealand dollar fell 0.5% against the greenback, tracking a decline in the Australian currency.

The euro was flat against the dollar even as French lawmakers prepared to vote on no-confidence motions against Prime Minister Michel Barnier later in the day, which will all but certainly collapse the government.

The dollar index was largely steady ahead of the key monthly US jobs report, due Friday, for further cues on the Federal Reserve's rate cut cycle. The US services Purchasing Managers' Index and the private payrolls report due later Wednesday will also provide cues on the same.

The dollar index received some boost after US job openings in October came in higher than expected. Data released Tuesday showed job openings in the US rose 372,000 to 7.7 million in October, more than the forecast of 7.5 million by a Dow Jones poll.

At 1353 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 106.42 against 106.34 on Tuesday and 106.38 on Monday. The pound sterling was up 0.1% against the US unit. (Pratiksha)

India Rupee: Premiums fall as RBI likely sells 6-month to 1-year dlr/rupee forwards

NEW DELHI – Premiums on the dollar/rupee forward contract fell across tenures as the Reserve Bank of India likely sold dollars for six- to one-year forward delivery on Wednesday, dealers said. The RBI's forward dollar sales were likely in order to nullify its spot interventions and avoid pushing out rupee liquidity, they said. 

The RBI had heavily sold forward dollars for one- to three-month forward delivery on Monday and Tuesday, Informist reported on Tuesday, citing currency dealers. A buy-sell swap entails buying dollars for immediate delivery and entering into a contract to sell these at a future date. "Forwards have been falling quite a lot. The one-year has breached 2%. They (RBI) are receiving mostly in the longer-end tenures," a dealer at a state-owned bank said. "Let us see how long this goes on. I don't think they would want very low premiums."

Liquidity conditions had worsened significantly at the beginning of last month primarily due to the central bank's intervention in the spot market. Though liquidity was in a surplus of INR 1 trillion on Tuesday, it is expected to fall back into deficit in the coming days, dealers said. 

Forward premiums also fell due to a rise in US Treasury yields, dealers said. US yields rose after US job openings in October came in higher than expected. Job openings rose 372,000 to 7.7 million in October, more than the forecast of 7.5 million in a Dow Jones poll. Premiums on forwards of a currency pair are reflective of the interest rate differential between the two countries.

Meanwhile, some banks bought dollars for forward delivery on behalf of importers who wanted to take advantage of the relatively lower levels, dealers said. This aided the forward premiums. 

Market participants now await the outcome of the three-day Monetary Policy Committee's meeting, due on Friday. The rate-setting panel is expected to keep the policy repo rate at 6.50% for the 11th meeting in a row, according to an Informist poll. They also await the key monthly US jobs report, due on Friday, for further cues on the Federal Reserve's rate cut cycle.

At 1155 IST, the premium on the one-year exact-period dollar/rupee forward contract was 168.41 paise, against 168.88 paise on Tuesday. On an annualised basis, the premium was at 1.98% against Tuesday's close of 1.99%. Premium fell to 1.97% during the day, its lowest level since Aug. 5. (Pratiksha)

India Rupee: Technical Levels for rupee - Dec 4

MUMBAI – At 0900 IST, the rupee was at 84.6900 a dollar, against its previous close of 84.6850. At 1114 IST, the rupee was at 84.6800 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 banks' dollar sales for RBI offset rise in oil price

MUMBAI – The rupee was steady as the Reserve Bank of India is likely to have sold dollars, offsetting the downward impact of a rise in crude oil prices, dealers said. Crude oil prices were up after Israel's threat to extend the war in Lebanon in case of a collapse in the truce with Hezbollah.

"The central bank is probably also selling, apart from exporters," a dealer with a state-owned bank said. "Some people are waiting for further data from the US to actually anticipate the future movement in rupee."

Prices also got a boost as investors assessed the chances of an extension of supply cuts by the Organization of the Petroleum Exporting Countries and its allies this week. At 1000 IST, the February Brent crude contract on the Intercontinental Exchange was at $73.68 per barrel, against its close of $73.62 per barrel on Tuesday and $71.83 per barrel on Monday.

The dollar index was steady as investors waited for more economic data from the US after the Job Openings and Labor Turnover Survey report showed the number of jobs in the US in October increased more than expected. The dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 106.52 at 0942 IST, against 106.34 on Tuesday and 106.38 on Monday.

A few exporters sold dollars anticipating a rise in the rupee, after the rupee ended at 84.6850 a dollar on Tuesday, up nearly 10 paise from the record low of 84.77 a dollar hit during the day, dealers said.  

For the rest of the day, the rupee is likely to move in a range of 84.60-84.80 against the dollar. Dealers see strong immediate technical resistance for the Indian unit at 84.60 a dollar.  (Sourabh Kumar)

India Rupee: Steady as banks' dlr sales for exporters offset rise in crude

MUMBAI – The rupee was steady against the dollar as banks sold dollars, likely on behalf of exporters, which offset the rise in crude oil prices, dealers said. 

"There is selling (of dollars) in small quantities, so difficult to say exactly who it is, but I think it is exporters," a dealer with a foreign bank said. After Tuesday's close of 84.6850, down nearly 10 paise from the record low of 84.7700 a dollar, exporters sold the greenback, anticipating the rupee to rise further, dealers said.

The dollar index was largely steady as investors waited for more economic data from the US after the Job Openings and Labor Turnover Survey report showed the number of jobs in the US in October increased more than expected.

Market participants now await the November jobs data, due Friday, which is estimated to show the addition of 214,000 jobs in the US economy, according to economists polled by Dow Jones. The unemployment rate is estimated at 4.2%, up from 4.1%, according to Dow Jones. The dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 106.52 at 0942 IST, against 106.34 on Tuesday and 106.38 on Monday

Crude oil prices were up, which weighed on the Indian currency, dealers said. Oil prices were up on the Israeli threat to extend the war in Lebanon in case of a collapse in the truce with Hezbollah. Prices also got a boost as investors assessed the chances of an announcement regarding the extension of supply cuts by the Organization of the Petroleum Exporting Countries and allies this week. At 0939 IST, the February Brent crude price on the Intercontinental Exchange was at $73.68 per barrel against its close of $73.62 per barrel on Tuesday and $71.83 per barrel on Monday.  

Market participants now await the release of more US economic data, especially Friday's labour data, for further cues regarding the rate trajectory in the US, dealers said. For the rest of the day, the rupee is likely to move in a range of 84.60-84.80 against the dollar. Dealers see strong immediate technical resistance for the Indian unit at 84.60 a dollar.  (Sourabh Kumar)

India Rupee - Asia FX: Most down; South Korean won recovers from 2-year low

MUMBAI – Asian currencies were mixed against the dollar, with the South Korean won recovering and rising 0.9% after hitting a two-year low as the country's president imposed martial law late Tuesday to counter what he termed "anti-state forces". He, however, withdrew it after a couple of hours, under pressure from the opposition.

Due to a volatile currency and stock market, the government said it would deploy "unlimited" liquidity measures for financial markets if needed. "We will inject unlimited liquidity into stocks, bonds, short-term money market, as well as the forex market for the time being until they are fully normalised," the government said in a statement. According to reports by Yonhap News Agency, the country's financial regulator could deploy about $7.1 billion in a stock market-stabilisation fund. 

Amid the volatility, Bank of Korea's monetary policy board also convened an extraordinary board meeting early Wednesday. Reports by the local media said the country's opposition, the Democratic Party, would begin impeachment proceedings against the president if he does not step down.

The dollar index was steady as investors waited for more economic data from the US after the Job Openings and Labor Turnover Survey report showed the number of jobs in the US in October increased more than expected. Job openings rose 372,000 to 7.7 million in October, more than the forecast of 7.5 million in a Dow Jones poll. 

Market participants now await November jobs data on Friday, which is estimated to show the addition of 214,000 jobs in the US economy, according to economists polled by Dow Jones. The unemployment rate is estimated at 4.2%, up from 4.1%, according to Dow Jones. 

The dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 106.47 at 0847 IST, against 106.34 on Tuesday and 106.38 on Monday.

The Philippines peso was up 0.3% against the dollar, as investors assessed an over two-year-high factory output. The Philippines Manufacturing Purchasing Managers’ Index rose to a 29-month high of 53.8 in November from 52.9 in October, according to S&P Global.

The Taiwan dollar was slightly higher against the dollar, supported by domestic equities. The Taiwan Stock Exchange Capitalization Weighted Stock Index was up 0.6% in early trade Wednesday.

The Malaysian ringgit and the Thai baht were steady against the greenback. The Indonesian rupiah, on the other hand, was down 0.1% against the dollar, near the psychologically important level of 16,000 rupiah per dollar. The Indonesian central bank may intervene to keep the currency stable, preventing it from falling below the psychologically crucial level, as per reports.  (Sourabh Kumar)

India Rupee: Expected range for rupee - Dec 4

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:

(Sourabh Kumar and Pratiksha)

End

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

Edited by Akul Nishant Akhoury

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