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Informist, Friday, Dec. 13, 2024

By Gowri Lakshmi

MUMBAI – The rupee ended slightly higher against the dollar Friday as banks sold the greenback for foreign fund inflows into the initial public offerings of domestic companies, dealers said. However, dollar purchases by some importers weighed on the local unit, they said.

"We were expecting a rise since yesterday. The IPOs which opened had good subscriptions, and since today was the last day for three of them, this rise was seen," a dealer at a state-owned bank said.

After rising to 84.7750 during the day, the rupee ended at 84.7875 against the dollar. The local unit moved in a broad range of 10 paise throughout the day. Amongst Asian currencies, the Indian rupee was the only one to appreciate against the dollar. The rupee rose 0.1% against the US unit.

The rupee opened largely steady against the greenback as foreign banks sold dollars on behalf of foreign portfolio investors, which offset the impact of importers' dollar purchases, dealers said. The public offers of One MobiKwik Systems Ltd., Sai Life Sciences Ltd., and Vishal Mega Mart Ltd. opened for subscription Wednesday and closed Friday. Inventurus Knowledge Solutions Ltd., opened for subscription Thursday and will close Monday.

"The IPO inflows were in good bulk, we got around $1 billion, if not more. It surely helped the rupee rise despite the buying pressure from importers," a dealer at a state-owned bank said.

The rupee was also aided by dollar sales by some exporters, who feared a further rise in the rupee. "Most are waiting. They wouldn't sell at this level, they are clearly waiting for a level closer to 84.90, but some did sell today to factor in their positions," a dealer at a public-sector bank said.

However, gains in the currency were capped as importers purchased the greenback fearing a fall in the rupee, dealers said. They see the Indian currency depreciating as expectations of a rate cut by the Reserve Bank of India's Monetary Policy Committee have increased after India's inflation softened more than expected in November. CPI inflation moderated to 5.48% in November from a 14-month high of 6.21% in October. An Informist poll had estimated the headline inflation in November at 5.6%.

The rupee remained unaffected despite a jump in the dollar index, dealers said. The dollar index surged to an over two-week high Friday after data Thursday showed producer prices in the US rose 0.4% on a monthly basis in November, against the estimate of a 0.2% rise in a Reuters poll. The dollar also got a boost as the euro slumped after the European Central Bank cut its benchmark rates by 25 basis points.

However, gains in the dollar index were capped by an unexpected rise in the number of people filing for unemployment benefits in the US. Data released Thursday showed that claims for unemployment benefits increased 17,000 to a seasonally adjusted 242,000 for the week ended Dec. 7. Analysts had estimated 220,000 claims, according to a Reuters poll.

At 1530 IST, the dollar index, which measures the strength of the dollar against six major currencies, was at 107.00, compared to 107.01 Thursday and 106.62 Wednesday. The dollar index had surged to an over two-week high of 107.19 earlier in the day.

Currently, traders are pricing in a 96.7% probability of the US Federal Reserve lowering its interest rate by 25 bps at its policy meeting next week, while they see a 3.3% chance of the central bank maintaining the status quo, according to the CME FedWatch tool. The Fed will announce its policy decision Wednesday.

FORWARDS

The premium on the one-year dollar/rupee forward contract ended slightly lower, largely due to a rise in the benchmark 10-year US Treasury yield, dealers said. 

Forward premiums also came down Friday as some banks sold the greenback for forward delivery, taking advantage of relatively higher levels, dealers said. Market participants now await the Fed's rate decision next week, dealers said.

At 1530 IST, the premium on the one-year exact-period dollar/rupee forward contract was 184.25 paise, against 183.66 paise Thursday. On an annualised basis, the premium was at 2.15%, against Thursday's close of 2.17%.

OUTLOOK

The markets are shut Saturday. On Monday, the rupee will take cues from movement in the dollar index ahead of the US Federal Open Market Committee meeting beginning Tuesday. The FOMC will announce its policy decision Wednesday. 

Traders will also closely watch developments in West Asia and take cues from crude oil prices, dealers said. Dealers expect importers to continue purchasing dollars for fear of a further depreciation in the rupee, which itself may put pressure on the Indian currency. The RBI is likely to intervene through dollar sales if the rupee falls sharply, they said. The rupee is seen in a range of 84.75-84.90 a dollar, with strong technical support pegged at 84.90 a dollar.

India Rupee - World FX: Sterling slumps on weaker than expected UK GDP data

MUMBAI – The pound sterling slumped 0.4% against the dollar after the release of weaker than expected GDP growth data from the UK. The unexpected announcement by the Office for National Statistics that monthly GDP and factory figures contracted in October, weighed on the currency.

The report showed a 0.1% decline in the economy, mirroring September's performance, while analysts had anticipated 0.1% growth. Both manufacturing and industrial production figures fell 0.6% month-over-month, marking a second consecutive monthly decline. Economists had predicted a recovery in factory output. Year-over-year, industrial production decreased 0.7%, while manufacturing production showed no change.

The euro was little changed against the dollar as market participants assessed comments by European Central Bank President Christine Lagarde after the central bank cut its key rate by 25 bps on Thursday. Following the ECB's decision to reduce its Deposit Facility rate by 25 basis points to 3%, Lagarde emphasised the worsening growth forecast for Eurozone due to a decline in exports and sluggish business investment, indicating the necessity for additional policy relaxation.

"Surveys indicate that manufacturing is still contracting and growth in services is slowing," she said, adding that "firms are holding back their investment spending in the face of weak demand and a highly uncertain outlook".

The dollar index rose across the board on Friday after the release of hotter than expected producer price index data in the US. The producer price index, commonly referred to as PPI, gauges the prices producers receive for their goods at the final demand level. The data print saw a monthly increase of 0.4%, surpassing the Dow Jones consensus prediction of 0.2%. On an annual basis, PPI rose 3%, the steepest increase since February 2023.

At 1536 IST, the dollar index, which measures the strength of the dollar against six major currencies, was at 107.01, compared to 107.01 on Thursday and 106.62 on Wednesday. The dollar index had surged to an over two-week high of 107.15 earlier in the day.

The Australian dollar was down 0.1% against the dollar. Tariff threats posed by US president-elect Trump's administration have strengthened the dollar overall, creating challenges for the currency pair. Rumours regarding a possible 10% tariff on Chinese imports could further weaken the Australian currency, given China is Australia's largest trading partner.

On Thursday, the Australian dollar found some support following the release of mixed employment figures. The seasonally adjusted employment change increased by 35,600, raising the total number of employed individuals to 14,535,500 in November. At the same time, the unemployment rate fell to 3.9%, the lowest since March and below market expectations of 4.2%.  (Kabir Sharma)

India Rupee: Premium tad dn on rise in US yld; mkt awaits Fed rate decision

MUMBAI – The premium on the one-year dollar/rupee forward contract came down slightly, largely due to a rise in the benchmark 10-year US Treasury yield, dealers said. Yield on the 10-year US Treasury note rose by six basis points on Thursday to settle at 4.32%.

"Today, it has fallen because of a rise in US yields, plus some receiving as it is a good level to receive," a dealer with a state-owned bank said. The 10-year US Treasury yield rose after data showed the producer price index in the world's largest economy rose 0.4%, more than the expectation of a 0.2% rise in a Reuters poll.

The one-year dollar/rupee forward premium has fallen from over a month high of 2.25%, on an annualised basis, hit on Thursday. Premiums rose Thursday as some banks purchased dollars for forward delivery, taking advantage of the arbitrage opportunity between the dollar/rupee onshore forward and offshore non-deliverable forward levels, dealers said.

"I think it is quite difficult to forecast where the premiums are likely to go because of so many unexpected movements, but I think the one-year forward premium could settle somewhere around 2.05% to 2.10%, at least this month," the dealers said.

Forward premiums also came down on Friday as some banks sold the greenback for forward delivery, taking advantage of relatively higher levels, dealers said. Market participants now await the rate decision of the US Federal Reserve next week, dealers said. Currently, the chances of the Fed cutting rates on Dec. 18 by 25 bps are 96.4%, as per CME FedWatch tool.

At 1251 IST, the premium on the one-year exact-period dollar/rupee forward contract was 182.00 paise, against 183.66 paise Thursday. On an annualised basis, the premium was at 2.15%, against Thursday's close of 2.16%.  (Sourabh Kumar)

India Rupee: Technical Levels for rupee - Dec 13

MUMBAI – At 0900 IST, the rupee was at 84.8600 a dollar, against its previous close of 84.8575. At 1145 IST, the rupee was at 84.8300 per dollar. The following are the key support and resistance levels for the rupee as provided by leading banks and brokerages:

(Sourabh Kumar and Gowri Lakshmi)

India Rupee - Asia FX: Fall as dollar index surges to over 2-week high

MUMBAI – Asian currencies were down against the greenback as the dollar index surged to an over two-week high Friday after data showed that producer prices in the US were slightly higher than expected in November. 

Producer prices in the US last month rose 0.4% on a monthly basis, against estimates of a 0.2% rise in a Reuters poll. Further, the dollar also strengthened as the euro fell after the European Central Bank cut its benchmark rates by 25 basis points. 

However, gains in the dollar index were limited due to an unexpected rise in the number of people filing for unemployment benefits in the US. Data released on Thursday showed that the claims for unemployment benefits increased 17,000 to a seasonally adjusted 242,000 for the week ended Saturday. Analysts had estimated 220,000 claims, according to a Reuters poll. 

At 1050 IST, the dollar index, which measures the strength of the dollar against six major currencies, was at 107.11, compared to 107.01 on Thursday and 106.62 on Wednesday. The dollar index had surged to an over two-week high of 107.15 earlier in the day.

Currently, traders are pricing in a 94.4% probability of the US Fed lowering its interest rate by a quarter percentage points at its policy meeting next week, while they see a 3.6% chance of the central bank maintaining status quo, according to the CME FedWatch tool. The US Fed will announce its policy decision on Dec. 18. 

Both the Indonesian rupiah and the Malaysian ringgit were down 0.4% against the dollar. The South Korean won was down 0.2% against the greenback due to ongoing political uncertainty in the country. On Friday, the finance ministry said that the country recorded a fall in overseas direct investment for the third consecutive quarter in Jul-Sept amid global economic uncertainty and geopolitical risk. Overseas investment in South Korea was down 6% at $14.19 billion in the quarter ended September, from $15.1 billion a year ago.

The Thai baht edged 0.3% lower against the US currency. However, losses were limited as Prime Minister Paetongtarn Shinawatra vowed additional stimulus and debt relief measures on Thursday to boost the sluggish economy.

The Chinese yuan was down 0.1% against the dollar as the government's new economic stimulus plans failed to spark excitement amongst investors. The Chinese government hinted at more public borrowing and spending in 2025 to boost consumption in order to tackle rising tariff threats from US President-elect Donald Trump's new administration at the Central Economic Work Conference. Beijing pledged to introduce measures aimed at "lifting consumption vigorously," in order to boost consumption and thereby lifting its sluggish economy.  (Gowri Lakshmi)

 India Rupee: Steady as likely IPO-linked FX inflows offset jump in dlr index

MUMBAI – The rupee was largely steady against the dollar as banks' dollar sales, likely for foreign fund inflows, offset the impact of a surge in the dollar index, dealers said. "Today (Friday) is the last day for subscription for three IPOs, foreign fund inflows are seen. So, we can expect the rupee to appreciate today rather," a dealer at a public-sector bank said. 

Banks sold the greenback, likely on behalf of overseas investors, looking to invest in the initial public offerings of domestic companies. The public offers of One MobiKwik Systems Ltd., Sai Life Sciences Ltd., and Vishal Mega Mart Ltd. opened for subscription on Wednesday and will close Friday. 

Meanwhile, the dollar index surged to an over two-week high on Friday after data on Thursday showed producer prices in the US rose 0.4% on a monthly basis in November, against the estimate of a 0.2% rise in a Reuters poll. The dollar also got a boost as the euro slumped after the European Central Bank cut its benchmark rates by 25 basis points. 

However, gains in the dollar index were capped by an unexpected rise in the number of people filing for unemployment benefits in the US. Data released on Thursday showed that claims for unemployment benefits increased 17,000 to a seasonally adjusted 242,000 for the week ended Dec. 7. Analysts had estimated 220,000 claims, according to a Reuters poll. 

At 0942 IST, the dollar index, which measures the strength of the dollar against six major currencies, was at 107.12, compared to 107.01 on Thursday and 106.62 on Wednesday. The dollar index had surged to an over two-week high of 107.15 earlier in the day.

Currently, traders are pricing in a 94.4% probability of the US Fed lowering its interest rate by 25 bps at its policy meeting next week, while they see a 3.6% chance of the central bank maintaining status quo, according to the CME FedWatch tool. The US Fed will announce its policy decision on Dec. 18.

Dealers expect the Reserve Bank of India to step in through dollar sales around current levels if the Indian unit comes under pressure. They expect the central bank to prevent the rupee from touching the psychologically crucial level of 85 per dollar. 

For the rest of the day, the rupee is likely to move in the range of 84.80-84.90 against the dollar. Dealers see strong immediate technical support for the Indian unit at 84.90 a dollar.  (Gowri Lakshmi)

India Rupee: Expected range for rupee - Dec 13

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:

(Pratiksha)

End

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

Edited by Rajeev Pai

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