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Informist, Monday, Dec. 16, 2024

By Gowri Lakshmi

MUMBAI – The rupee ended lower against the dollar Monday as banks purchased the greenback for importers, dealers said. The rupee's fall also came amid losses in other Asian currencies ahead of the US Federal Open Market Committee's meeting commencing on Tuesday, they said. A fall in domestic equities also weighed on the rupee. 

"The equities market opened low today. We thought the rupee could pick up, but the rupee was tracking the equities market. Further, it has been tracking the yen and yuan too, which were down before the Fed cuts," a dealer at a state-owned bank said.

The rupee fell to 84.8725, before settling at a record closing low of 84.8625. The rupee moved in a wide range of 9 paise throughout the day. The Chinese yuan fell 0.2% against the US currency, while the Indian unit fell 0.1%. 

The rupee opened steady against the dollar as banks sold the greenback on behalf of foreign portfolio investors, which offset the impact of a rise in crude prices, dealers said. Banks sold dollars for foreign portfolio investors looking to invest in the initial public offerings of domestic companies. The IPOs of Inventurus Knowledge Solutions Ltd. and Yash Highvoltage Ltd. opened for subscription on Thursday and will close on Monday, while those of International Gemmological Institute Ltd., Hamps Bio Ltd., and Digjam Ltd., opened for subscription on Friday and will close on Tuesday.

"Inflows were there since it was the last day for some of the IPOs, bulk inflows are usually expected on the last day," a dealer at a state-owned bank said. "Inflows were there but nothing significant enough to stop the rupee from falling," he added. Despite the IPO-related foreign fund inflows, the rupee came under pressure, tracking the fall in the Chinese yuan and the Japanese yen.

The Chinese yuan was down against the US currency as retail sales in the country missed forecasts. China's retail sales rose 3%, against analysts' estimate of 4.6% in a Reuters poll. The Japanese yen was down as scepticism about a rate hike by the Bank of Japan loomed. The Bank of Japan will announce its policy decision on Thursday.

The rupee was also weighed down as banks bought the greenback for importers, fearing further rise in crude oil prices, dealers said. Crude futures remained firm after ending higher on Friday due to prospects of additional sanctions on Russia and Iran, leading to worries about the global supply of crude oil. "Importers were not panic buyers today, they were just active, but then the rupee had to be weighed," a dealer at a private bank. 

The February Brent Crude contract on the Intercontinental Exchange rose to as high as $74.60 per barrel from $74.49 per barrel on Friday and $73.41 per barrel on Thursday. However, crude prices began dropping from highs as investors turned their focus to the US Federal Open Market Committee's meeting commencing on Tuesday.

The dollar index remained firm ahead of the US FOMC meeting. Currently, traders are pricing in a 97.1% chance of the Fed lowering its interest rates by 25 basis points, while they see a slim chance of 2.9% that the central bank will hold rates steady. The central bank is set to announce its monetary policy decision early on Thursday. 

At 1530 IST, the dollar index, which measures the strength of the dollar against six major currencies, was at 106.98, against the previous close of 106.95 and 107.01 on Thursday.

However, towards the closing hour, some banks sold the greenback on behalf of exporters, which prevented a sharp fall in the rupee, dealers said. "There was selling pressure, exporters were waiting for the rupee to hit 84.86-84.87, so when it depreciated, they covered whatever was left from last week's positions," a dealer at a state-owned bank said. 

Back home, data showed record high imports and a fall in exports in November, pushing the country's merchandise trade deficit to an all-time high of $37.84 billion. Dealers said this is likely to weigh on the rupee.

FORWARDS

The premium on the one-year dollar/rupee forward contract ended slightly higher due to a rise in the dollar/rupee overnight swap rate, dealers said. The implied overnight cost of deploying dollars through foreign exchange swaps was over 10% on Monday owing to dollar inflows and narrowing surplus rupee liquidity in the banking system, they said.

Some dealers said the RBI may have sold dollars for one- to three-month forward delivery, which weighed on premiums. The RBI's forward dollar sales were possibly to neutralise the impact of its spot interventions and avert draining out rupee liquidity, they said.

At 1530 IST, the premium on the one-year exact-period dollar/rupee forward contract was 187.32 paise, against 184.25 paise on Friday. On an annualised basis, the premium was at 2.18%, unchanged from Friday.

OUTLOOK

On Tuesday, the rupee will take cues from movement in the dollar index and crude oil prices, dealers said. The rupee will also closely track movements in its Asian peers, especially the Chinese yuan, they said. 

Data showed India's trade deficit widened to an all-time high of $37.84 billion in November due to record high imports and a fall in exports. Dealers said this is likely to weigh on the rupee.

Dealers expect importers to continue purchasing dollars on fear of further depreciation in the rupee, which itself may put pressure on the Indian currency. However, they also expect exporters to sell the greenback to take advantage of the relatively higher dollar/rupee levels. Dealers say the central bank could intervene through dollar sales if the rupee falls sharply. 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:Euro up ahead of PMI; Lagarde confirms more rate cuts

India Rupee - World FX: Euro up ahead of PMI; Lagarde confirms more rate cuts

MUMBAI – The euro was up 0.1% against the dollar ahead of the preliminary Eurozone purchasing manager's index for December due later in the day. Further, European Central Bank President Christine Lagarde in a speech on Monday confirmed more interest rate cuts by the central bank going ahead.

"Will cut rates further if incoming data confirms that disinflation is on track. Past bias towards keeping rates 'sufficiently restrictive' is no longer warranted. We are close to achieving our target. Inflation momentum for services has steeply dropped recently," Lagarde said. The European Central Bank lowered its benchmark rates for the fourth time this year last week and kept the door open for further policy easing.

The Japanese yen was flat in the European trade session after falling to a near 3-week low early Monday as investors stayed cautious ahead of the Bank of Japan's monetary policy decision this week. According to Reuters reports, analysts expect the central bank to maintain status quo and go for a rate hike likely by March. The central bank is scheduled to deliver its decision on Thursday.

The pound sterling was up 0.2% against the dollar despite data on Friday showing that the economy had contracted by 0.1% in October. Another report showed that UK manufacturing dropped 0.6% in October, while industrial production dropped 0.7%. Traders are now waiting for the interest rate decision by the Bank of England due Thursday.

The New Zealand dollar was up 0.4% against the greenback. However, gains in the currency were capped by mixed economic data from China. China's retail sales rose 3% on year in November, against analysts' estimate of 4.6% in a Reuters poll. Another data showed that the country's total value-added of industrial enterprises grew 5.4% on year, while the service production index grew 6.1% annually. The Australian dollar was up 0.1%. Any change in the Chinese economy will directly influence the currencies of Australia and New Zealand due to their close bilateral trade relations.

The dollar index remained firm ahead of the US Federal Open Market Committee's meeting scheduled to commence on Tuesday. The central bank is said to deliver its monetary policy early on Thursday. Currently, traders price in a 97.1% of the Fed lowering its interest rates by 25 basis points, while they see a slim chance of 2.9% that the central bank will hold rates steady.

At 1458 IST, the dollar index, which measures the strength of the dollar against six major currencies, was at 106.82, against the previous close of 106.95 and 107.01 on Thursday.  (Gowri Lakshmi)

India Rupee: Tad down on importers' dollar buys, fall in Asian currencies

MUMBAI – The rupee was slightly down against the dollar as banks purchased the greenback on behalf of importers, dealers said. A fall in other Asian currencies also put the rupee under downward pressure, they said. The rupee has moved just 4 paise so far during the day.

"The (domestic) equity is down, there is buying (of dollars) and the rupee is probably tracking Asian currencies – the Japanese yen and Chinese yuan are down," a dealer at a small private bank said. 

The rupee was weighed down as its other Asian peers traded lower against the greenback ahead of the US Federal Open Market Committee meeting scheduled to commence Tuesday. The Fed committee will deliver its policy announcement early Thursday, with market participants factoring in a quarter percentage point rate cut. Currently, traders see a 97.1% probability of the Fed cutting rates by 25 basis points, while they see a slim chance of 2.9% chance of the central bank maintaining status quo, according to the CME FedWatch tool. 

The dollar index, too, remained firm ahead of the Fed committee's decision. At 1233 IST, the dollar index, which measures the strength of the greenback against six major currencies, was at 106.86, against its previous close of 106.95 and 107.01 on Thursday.

The local currency also came under downward pressure as importers rushed to purchase the greenback, fearing a further rise in crude oil prices, dealers said. Crude futures remained firm after ending higher Friday due to prospects of additional sanctions on Russia and Iran, leading to worries about the global supply of crude oil. 

The February Brent Crude contract on the Intercontinental Exchange rose as high as $74.60 per barrel, compared with $74.41 per barrel on Friday and $73.41 per barrel on Thursday. 

For the rest of the day, the rupee is likely to move in the range of 84.70-84.90 against the dollar. Dealers see strong immediate technical support for the Indian unit at 84.90 a dollar.  (Gowri Lakshmi)

India Rupee: Technical Levels for rupee - Dec 16

MUMBAI – At 0900 IST, the rupee was at 84.8275 a dollar, against its previous close of 84.7875. At 1121 IST, the rupee was at 84.8225 per dollar. The following are the key support and resistance levels for the rupee as provided by leading banks and brokerages:

(Pratiksha and Gowri Lakshmi)

India Rupee - Asia FX: Most dn; won falls as South Korea impeaches president

MUMBAI – Most Asian currencies were down against the dollar ahead of the US Federal Open Market Committee's meeting, scheduled to commence on Tuesday. The committee will announce its policy decision early Thursday. Traders have currently priced in a 97.1% probability of the central bank lowering its rates by 25 basis points, with a slim 2.9% chance of it maintaining a status quo. 

The dollar index, too, remained firm ahead of the Fed's rate decision. At 0848 IST, the dollar index, which measures the strength of the dollar against six major currencies was 106.87, against its previous close of 106.95 and 107.01.

The Malaysian ringgit was down 0.3%. The Philippines peso was down 0.4% against the greenback ahead of the country's central bank decision, due Thursday. Market analysts have forecast that the Philippines' central bank may reduce its benchmark rates by 25 bps, bringing the rates to 5.75% from the current 6%, according to the Manila Times.

The South Korean won was down 0.2% against the dollar amid ongoing political instability in the country. However, losses in the currency were capped as the Bank of Korea on Sunday vowed to stabilise the financial markets to tackle excessive volatility in the wake of the impeachment vote against President Yoon Suk Yeoul. 

The Chinese yuan was down 0.1% against the US currency as retail sales in the country missed forecasts due to a slump in real estate. China's retail sales rose by 3%, against the analyst estimate of 4.6% in a Reuters poll. However, data on Monday revealed that the Chinese economy continued to recover in November, supported by new stimulus plans and an improvement in public expectations. The total value added of the industrial enterprises grew 5.4% on year, while the service production index grew 6.1% annually. 

The Indonesian rupiah was down 0.1% against the dollar as traders remain cautious ahead of policy rate decisions by the central bank on Wednesday, reports said. Bank Indonesia is expected to hold its key interest rate steady to support the currency. As per a Reuters poll, a little over 50% of the respondents expected the central bank to hold rates steady at 6.00%.

The Taiwan dollar was down 0.1%, while the Thai baht was flat against the US currency. (Gowri Lakshmi)

India Rupee: Steady as IPO-related FX inflows offset rise in crude prices

Informist, Monday, Dec. 16, 2024

MUMBAI – The rupee was steady against the dollar Monday as banks' dollar sales, likely for foreign fund inflows, offset the impact of rise in crude oil prices, dealers said. "The market is steady with not much movement now, but we are seeing a positive bias for INR (rupee) today. As the equity market progresses, we can see the rupee picking up," a dealer at a state-owned bank said.

Banks sold the greenback, likely on behalf of foreign portfolio investors looking to invest in the initial public offerings of domestic companies, dealers said. The IPO for Inventurus Knowledge Solutions Ltd. and Yash Highvoltage Ltd., opened for subscription on Thursday and will close on Monday. International Gemmological Institute Ltd., Hamps Bio Ltd., and Digjam Ltd., opened for subscription on Friday and will close on Tuesday.

Some banks purchased the greenback for importers, who feared a further rise in crude oil prices. "If we see the Brent movement, it is $74 per barrel now. The importers are not in a panic because this was expected," a dealer at a public-sector bank said. At 0943 IST, the February Brent Crude contract on the Intercontinental Exchange rose as high as $74.60 per barrel, compared with $74.41 per barrel on Friday and $73.41 per barrel on Thursday. 

Market participants are currently focusing on the US Federal Open Market Committee meeting beginning Tuesday. Traders now price in a 97.1% probability of the Fed cutting its benchmark rates by 25 basis points, while they see a slim chance of just 2.9% for the central bank maintaining the status quo.

The dollar index remained firm ahead of the FOMC. At 0949 IST, the dollar index, which measures the strength in the dollar against six major currencies, was 106.87, against its previous close of 106.96, and 107.01 on Thursday.

For the rest of the day, the rupee is likely to move in the range of 84.70-84.90 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 16

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:

(Pratiksha)

End

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

Edited by Avishek Dutta

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