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Informist, Monday, Dec. 9, 2024

By Gowri Lakshmi

MUMBAI – The rupee settled slightly lower against the dollar as banks purchased the greenback likely on behalf of importers, which weighed on the local unit, dealers said. However, the Reserve Bank of India likely stepped in with its dollar sales, which prevented the rupee from falling sharply and curbed volatility in the market, they said.

"There has been selling (of dollars) since morning, RBI heavily protected the 84.70 levels today (Monday)," a dealer at a private bank said. 

After trading in a "tight" range of only 5 paise during the day, the rupee settled at 84.7300 a dollar Monday, just a whisker away from its record closing low of 84.7400 a dollar, which it hit on Dec. 4. The rupee ended at 84.6875 a dollar on Friday. A fall in other Asian currencies also weighed on the rupee. Asian currencies fell between 0.1-0.7%, with the South Korean won being the worst performer.

However, some banks also sold the greenback on behalf of exporters, who wanted to take advantage of the higher dollar/rupee level, which aided the domestic currency, dealers said. 

The rupee opened broadly steady at 84.6850 against the dollar. However, immediately after the domestic spot market opened, the rupee came under pressure from importers, especially oil marketing companies, dealers said. Oil marketing companies rushed to purchase the greenback as they were wary of further rise in crude prices.

Oil prices rose amid fresh geopolitical tensions triggered in West Asia, after Syrian rebels overthrew the Bashar al-Assad-led government on Saturday. At 1530 IST, the February Brent Crude contract on the Intercontinental Exchange was at $71.90 per barrel, compared to its previous close of $71.12 per barrel on Friday. 

The rupee was also weighed as importers began 'hedging and going long on dollars', dealers said. Importers purchased the greenback, fearing a further fall in the rupee due to strength in the dollar index. The dollar index gained as data on Friday showed that non-farm payrolls in the US rose by 227,000 in November, higher than the estimated addition of 200,000 jobs in a Reuters poll. The numbers for October were also revised upwardly to an addition of 36,000 non-farm jobs. Gains in the dollar index, however, were limited as data showed a rise in the unemployment rate to 4.2% in November from 4.1% the month before.

At 1530 IST, the dollar index, which measures the strength of the greenback against six major currencies, rose to a high of 106.21, compared with 105.97 on Friday and 105.73 on Thursday.

Market participants now eye the US CPI figures, due Wednesday, to get more cues on the interest rate decisions by the US Federal Reserve next week. Currently, traders are pricing in an 87.1% chance of the Fed cutting rates by 25 basis points at its December policy meeting, while they see a 12.9% chance of the central bank maintaining the status quo. The Fed will announce its rate decision on Dec. 18.

However, some banks sold the greenback, likely on behalf of the RBI, which stepped up its market intervention through dollar sales as the rupee began inching toward its lifetime low, dealers said. 

Some banks also sold the greenback on behalf of exporters who wanted to take advantage of the relatively higher dollar/rupee levels, which also supported the rupee, dealers said. "Exporters are seen selling at all levels as these are attractive (levels) but most are still waiting for the rupee to fall closer to 84.75 a dollar. But their dollar sales have been helping the rupee," a dealer at a private bank said.

FORWARDS

The premium on the one-year dollar/rupee forward contract gave up some gains and ended nearly steady Monday. Premiums rose earlier tracking movements in US Treasury yields after the release of non-farm payroll and unemployment data on Friday, dealers said.

US Treasury yields declined after the payroll data for November, which suggested that there is no immediate necessity for the Federal Reserve to change its strategy regarding a rate cut in December. The yield on the two-year note dropped by 5 basis points to 4.10%, while the 10-year yield fell 2 basis points, indicating investor trust in the Fed's consistent approach.

At 1530 IST, the premium on the one-year exact-period dollar/rupee forward contract was 176.50 paise, against 175.50 paise on Friday. On an annualised basis, the premium was at 2.09%, as against Friday's close of 2.07%.

OUTLOOK

On Tuesday, the rupee will take cues from the movement of the dollar index ahead of the US CPI due Wednesday. "Tomorrow (Tuesday) is likely to be range-bound. We don't have to expect any drastic movement till Thursday morning, until US data is out. We can expect 5-10 paisa movement toward the end of the week," a dealer at a private bank said. 

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 curb any sudden volatility, they said. Dealers expect exporters to sell the greenback to take advantage of the relatively higher dollar/rupee levels.

However, they also 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 84.60-84.80 a dollar, with strong technical support pegged at 84.75 a dollar.

India Rupee: Premium up as US ylds fall after econ data raises rate cut bets

MUMBAI – The premium on the one-year dollar/rupee forward contract rose on Monday, tracking a slight fall in US Treasury yields after the release of non-farm payroll and unemployment data on Friday, dealers said. "It is tracking UST (US Treasury yields), there is some volume, but hedging is not happening that much today," a dealer with a state-owned bank said.

US Treasury yields declined after the payroll data for November, which suggested that there is no immediate necessity for the Federal Reserve to change its strategy regarding a rate cut in December. The yield on the two-year note dropped by 5 basis points to 4.10%, while the 10-year yield fell 2 basis points, indicating investor trust in the Fed's consistent approach.

The November payrolls data boosted expectations of a rate cut by the Federal Reserve this month. The US labour market added 227,000 non-farm jobs in November, against the forecast of 200,000 in a Reuters poll, signalling solid growth without overheating concerns. At 4.2%, unemployment in November ticked up as expected, reinforcing hopes of a rate cut.

Dealers said there was some selling of forward dollars by banks near the 2.10% level in the one-year contract. At 1445 IST, the premium on the one-year exact-period dollar/rupee forward contract was 176.50 paise, against 175.50 paise on Friday. On an annualised basis, the premium was at 2.09%, as against Friday's close of 2.07%. (Kabir Sharma)

India Rupee - World FX:Yen down 0.2%; revised Jul-Sept Japan GDP limits fall

MUMBAI – The Japanese yen was down 0.2% against the dollar Monday. However, losses in the currency were pared as growth in the country's Jul-Sept expanded at a faster pace than initially reported. The GDP for the quarter ended September was revised upwardly to 1.2%, against the initially recorded 0.9% rise. The data is said to be among the economic figures the Bank of Japan will scrutinise at its next policy meeting on Dec. 18-19. Analysts see a very slim chance of the central bank hiking rates in its December policy. However, they expect the Bank of Japan to hike rates by March next year.

The New Zealand dollar was down 0.3% following comments from Prime Minister Christopher Luxon that the government will stay committed to lowering interest rates. "Our commitment is to energise the economy by continuing efforts to lower living costs, inflation, and interest rates," Luxon said on Monday.

The Euro was down 0.1% against the greenback ahead of the European Central Bank's policy announcement due Thursday. Analysts expect the central bank to lower its benchmark rates at its final policy meeting of 2024. Market participants will keenly watch the post-policy press conference by ECB President Christine Lagarde to get further cues on future interest rate decisions.

The Australian dollar was up 0.6% against the US currency ahead of the policy announcement by the Reserve Bank of Australia on Tuesday. According to a survey by Bloomberg, analysts expect the central banks to keep the policy rate steady at 4.35%. 

The pound sterling was up 0.1% against the greenback. On Friday, Bank of England policymaker Swati Dhingra cautioned that the central bank's policy stance was still very restrictive and there was a need for the central bank to cut interest rates further. "A combination of all of those factors--the weak consumption, the weak investment and possible damage to supply capacity--is what I would worry about. And that's why I think we should be easing policy more," Dhingra said. The Bank of England is scheduled to meet for policy decision on Dec. 19.

The dollar index gained some strength as data on Friday showed that non-farm payrolls in the US rose by 227,000 in November, higher than the estimated addition of 200,000 jobs in a Reuters poll. The numbers for October were also revised upwardly to an addition of 36,000 non-farm jobs. Gains in the dollar index, however, were limited as data showed a rise in the unemployment rate to 4.2% in November from 4.1% the month before.

At 1357 IST, the dollar index, which measures the strength of the greenback against six major currencies, was at 106.02, compared with 105.97 on Friday and 105.73 on Thursday.

Market participants now eye the US CPI figures, due Wednesday, to get more cues on the interest rate decisions by the US Federal Reserve next week. Currently, traders are pricing in an 85.1% chance of the Fed cutting rates by 25 basis points at its December policy meeting, while they see a 14.9% chance of the central bank maintaining the status quo. The Fed will announce its rate decision on Dec. 18.  (Gowri Lakshmi)

 India Rupee: RBI's likely intervention limits fall; importer purchases weigh

MUMBAI - The Reserve Bank of India is likely to have intervened in the foreign exchange market Monday by way of dollar sales to prevent a further fall in the rupee, dealers said. Losses in the Indian currency were limited, which came under pressure from dollar purchases by importers. 

"Some selling orders are there from them (RBI), and don't see it breaking 74 levels (84.74 a dollar) easily," a dealer with a state-owned bank said. The central bank sold dollars as the rupee was trading near its lifetime low of 84.77 a dollar that it hit on Dec. 3.

Importers, especially oil marketing companies, have been actively purchasing the greenback since morning, which put the rupee under pressure, dealers said. Wary of a further rise in oil prices amid escalating tensions in West Asia, oil marketing companies purchased the greenback. Crude oil prices began to rise after fresh tension in the region as Syrian rebels overthrew President Bashar al-Assad-led government on Saturday. Other importers too bought the greenback fearing a sharp fall in the domestic unit. 

At 1128 IST, the February Brent crude contract on the Intercontinental Exchange was $71.48 per barrel, against Friday's close of $71.12 per barrel. 

Apart from RBI's likely intervention, some banks also sold the greenback on behalf of exporters, who wanted to take advantage of the relatively higher dollar/rupee levels, 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 support for the Indian unit at 84.75 a dollar.  (Gowri Lakshmi)

India Rupee: Technical Levels for rupee - Dec 9

MUMBAI – At 0900 IST, the rupee was at 84.6850 a dollar, against its previous close of 84.6875. At 1056 IST, the rupee was at 84.7250 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: Tad down on dlr buys by importers; strength in dlr index weighs

India Rupee: Tad down on dlr buys by importers; strength in dlr index weighs

MUMBAI – The rupee was slightly down against the dollar as banks purchased the greenback on behalf of importers, which weighed on the local unit, dealers said. "The market isn't moving much now. There was buying pressure in the morning from importers trying to go long (on dollars), which pulled the rupee to 84.7100 a dollar right after the market opened," a dealer at a state-owned bank said. "The rupee may rise as high as 84.6400 a dollar and can fall as low as 84.7500 a dollar during the day."

Importers purchased the greenback as they were wary of a further fall in the domestic unit, dealers said. Importers also "panic-bought" dollars amid a rise in crude oil prices due to an escalation of tensions in West Asia after Syrian rebel groups overthrew President Bashar al-Assad on Saturday.

At 0937 IST, the February Brent Crude contract on the Intercontinental Exchange was at $71.41 per barrel, compared to its previous close of $71.12 per barrel on Friday and $72.09 per barrel on Thursday. 

The rupee was also weighed down by a strength in the dollar index as data on Friday showed that non-farm payrolls in the US rose by 227,000 in November, higher than the estimated addition of 200,000 jobs in a Reuters poll. The numbers for October were also revised upwardly to an addition of 36,000 non-farm jobs. Gains in the dollar index, however, were limited as data showed a rise in the unemployment rate to 4.2% in November from 4.1% the month before. 

At 0940 IST, the dollar index, which measures the strength of the greenback against six major currencies, was at 106.10, compared to 105.97 on Friday and 105.73 on Thursday.

Market participants now eye the US CPI figures, due Wednesday, to get more cues on the interest rate decisions by the US Federal Reserve next week. Currently, traders are pricing in an 85.1% chance of the Fed cutting rates by 25 basis points at its December policy meeting, while they see a 14.9% chance of the central bank maintaining the status quo. The Fed will announce its rate decision on Dec. 18.

Some banks sold the greenback on behalf of exporters, which limited the fall in the rupee, dealers said. Some exporters sold the greenback to take advantage of relatively higher dollar/rupee levels. Dealers expect exporters to sell the US currency aggressively later in the day. They also expect the Reserve Bank of India to step in through their dollar sales to prevent the rupee from falling sharply and to curb any sudden volatility.

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 support for the Indian unit at 84.75 a dollar.  (Gowri Lakshmi)

India Rupee - Asia FX: Most down as dlr index up; South Korean won falls 1%

MUMBAI – Most Asian currencies were down against the dollar as the dollar index strengthened ahead of the release of US inflation data, due Wednesday. The key economic data will give further cues about the US Federal Reserve's interest rate decision at its policy meeting next week. 

The dollar index rose on Friday after data showed that US non-farm payrolls in November increased by 227,000, higher than expectations of 200,000 new jobs in a Reuters poll. The numbers for October were also revised up to show 36,000 additions in non-farm jobs. At 0849 IST, the dollar index, which measures the strength of the dollar against six major currencies, was at 106.06, compared to 105.97 on Friday and 105.73 on Thursday.

However, the gains in the dollar index were limited as data on Friday also showed a rise in the unemployment rate to 4.2% in November. Traders have now priced in an 83.4% chance of the Fed cutting rates by 25 basis points at its December policy meeting, with a 16.6% chance of the central bank maintaining the status quo.

The South Korean won was down 1.0% against the dollar due to political instability in the country. South Korea is experiencing political turmoil after an impeachment motion failed against President Yoon Suk Yeol. With the president facing intense pressure to resign, ruling party leader Han Dong-hoon on Sunday said Prime Minister Han Duck-soo will manage the nation's affairs. As of 0930 IST, the benchmark index KOSPI was down 2.2%. 

The Chinese yuan was down 0.7% against the dollar, as data on Monday showed that China's inflation touched a five-month low in November. Consumer prices rose 0.2% on year last month, below the 0.3% increase in October and a 0.5% rise forecast in a Reuters poll.

The Malaysian ringgit was down 0.1% against the dollar. The Philippine peso was down 0.5% against the greenback after data showed that the unemployment rate in the Philippines rose in October and job quality worsened. Data showed that the jobless rate was 3.9% in October, with 1.97 million people being either unemployed or out of business in October, against the 1.89 million recorded in September. 

Bucking the trend, the Thai baht was up 0.4% against the greenback. However, gains in the currency were capped due to a fall in domestic equities. At 0930 IST, the benchmark Thai Set Index was down 0.5%. (Gowri Lakshmi)

India Rupee: Expected range for rupee - Dec 9

MUMBAI – Following are the expected support and resistance levels for the rupee on Monday, 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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