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Informist, Friday, Dec. 20, 2024

By Gowri Lakshmi

MUMBAI – The rupee ended higher against the dollar Friday as banks sold the greenback, likely on behalf of foreign portfolio investors and the Reserve Bank of India, which led the rupee to rise above 85 per dollar during the day, dealers said. The Indian unit rose to a high of 84.9500 a dollar due to foreign fund inflows on account of the FTSE readjustments, before erasing some gains, they said. 

"There were many factors for the rupee's rise. It was expected in the coming but today's RBI sales (of dollars), exporters' profit bookings, and the inflows led to the INR strengthening," a dealer at a private bank said.

Despite falling to a lifetime low of 85.1000 against the dollar, the rupee settled at 85.0150 a dollar, against the previous close of 85.0700 a dollar. The domestic currency moved in a wide range of 15 paise throughout the day.

The rupee opened steady against the dollar as a surge in the dollar index was offset by a drop in crude oil prices, dealers said. "The dollar strengthened after the Federal Reserve's commentary on slower pace of the monetary policy easing cycle and revised GDP figures, which is weighing on INR," a dealer at a public sector bank said.

The dollar index jumped to an over two-year high after an upward revision of GDP and an unexpected fall in jobless claims in the US. Data on Thursday showed US GDP increased 3.1% annually in the quarter ended September. Further, jobless claims data showed that the number of Americans filing for unemployment benefits fell by 22,000 to 220,000 in the week ended Saturday, below analysts' estimates of 229,000.

The strong labour market data and projection of a resilient economy lifted the dollar index to its highest level in over two years at 108.54 on Thursday, as the US Federal Reserve pushed back expectations on the pace of rate cuts next year. At 1530 IST, the dollar index, which measures the strength of the dollar against six major currencies, was at 108.17, compared to 108.43 on Thursday and 108.20 on Wednesday. 

Oil prices extended their losses from Thursday on concerns about weak demand growth in 2025 from China, the largest oil importer, making crude oil prices settle over 2% lower over the week. According to media reports, slowing economic growth in the Eurozone could also pull down demand for crude oil. At 1530 IST, the February Brent crude price on the Intercontinental Exchange was $72.16 per barrel, compared to its previous close of $72.88 per barrel on Thursday and $73.39 per barrel on Wednesday.

However, shortly after the domestic spot market opened, banks rushed to purchase the greenback on behalf of importers, tracking a fall in crude oil prices, which weighed down the rupee. Oil marketing companies purchased the greenback, wary of further rise in crude oil prices, while other importers bought dollars fearing further depreciation in the domestic unit, dealers said. This higher dollar demand from importers pulled the rupee to a lifetime low of 85.1000 during the day, they said.

However, some banks sold the greenback on behalf of the Reserve Bank of India as soon as the rupee hit the record low, which prevented the rupee from falling sharply and curbed excessive market volatility, dealers said. Some foreign banks also sold on behalf of exporters who wanted to take advantage of the relatively higher dollar/rupee levels, which gave some cushion to the domestic unit, they said. "There are IPO (initial public offering)-linked inflows expected from next week, and the rupee is seen rising, so exporters are profit booking now," a dealer at a private bank said. 

The rupee rose above the 85-per-dollar mark to as high as 84.9500 a dollar due to foreign fund inflows on account of the FTSE readjustment which comes into effect from Dec. 23. Following the periodic readjustment in the FTSE index, Nuvama expects foreign flows to the tune of around $310 million into ICICI Bank, with Kotak Mahindra Bank, Bajaj Finance, Prestige Estates, Nexus Select, and others also attracting significant flows. Kotak Mahindra Bank is expected to attract inflows of $118 million. 

However, gains in the currency were limited, tracking a slump in the domestic stock market. The benchmark Nifty 50 and the Sensex ended 1.5% lower each on Friday.

FORWARDS

The premium on the one-year dollar/rupee forwards contract was largely steady on Friday as forward dollar purchases by some banks, coupled with the liquidity deficit in the banking system, offset the downward pressure from a rise in the benchmark 10-year US Treasury yield, dealers said. Premiums on forwards of a currency pair are reflective of the interest rate differential between the two countries.

The yield on the benchmark 10-year US Treasury note rose 7 basis points to 4.57% on Thursday after US GDP growth numbers for Jul-Sept were revised upward to 3.1% on year from the previously reported 2.8%. This supported the view that the US Federal Reserve may go slow on its pace of rate cuts.

On Friday, the premium on the one-year exact-period dollar/rupee forward contract was 189.50 paise, against 191.00 paise on Thursday. On an annualised basis, the premium was at 2.23%, against Thursday's close of 2.25%.

OUTLOOK

The markets are shut on Saturday. On Monday, the rupee will take cues from movement in the dollar index after US personal consumption expenditure later in the day. "We can expect the market reaction to the data (PCE) on Monday, a dealer at a public sector bank said. "But the euphoria of a new Trump-administration and the Fed rate cut will settle down. We expect IPO inflows, which will have a big impact and can help the rupee rise in the upcoming week," he added. 

The rupee will also take cues from crude oil prices. Dealers expect importers to continue purchasing dollars for fear of a rise in crude oil prices, which itself may put pressure on the Indian currency. They also expect exporters to sell dollars to take advantage of the higher dollar/rupee, as market participants say the central bank may protect the rupee sharply, preventing it from falling below 85.10 a dollar.

The RBI is likely to intervene through dollar sales if the rupee falls sharply, they said. The rupee is seen in a range of 84.90-85.15 a dollar, with strong technical support pegged at 85.10 a dollar.

India Rupee - World FX:Dlr index surges to over 2-yr high post key econ data

India Rupee - World FX: Dlr index surges to over 2-yr high post key econ data

MUMBAI – The dollar index surged to an over 2-year high following an upward revision of GDP and an unexpected fall in jobless claims in the US. Data on Thursday showed that the GDP increased 3.1% annually for the quarter ended September. Further, the jobless claims data showed that the number of Americans filing for unemployment benefits fell by 22,000 to 220,000 in the week ended Saturday, below analysts' estimates of 229,000.

The strong labour market data and projection of a resilient economy bolstered the dollar index to its highest level in over two years at 108.49 on Thursday, as the US Federal Reserve pushed back expectations on the pace of rate cuts next year. At 1457 IST, the dollar index, which measures the strength of the dollar against six major currencies, was at 108.21, after hitting an over two-year-high of 108.54 earlier in the day. The index was at 108.43 on Thursday and 108.20 on Wednesday.

Traders are currently waiting for the personal consumption data from the US, due later in the day, with analysts estimating a 0.2% rise in November, against the 0.3% rise in October.

The Japanese yen was up 0.4% against the dollar following remarks from top officials in the finance ministry. "As we are alarmed by recent currency market developments including those driven by speculators, we'll take appropriate action against excessive moves," Finance Minister Katsunobu Kato said on Friday.

Further, data showed that Japan's inflation figures were at a seven-month high in November, which is likely to prompt the central bank to raise rates early next year. The core-core inflation rose to 2.4% from 2.3% in October, the highest level since April. The core inflation rate came at 2.7%, against analyst expectations of 2.6% in a Reuters poll.

The euro was down 0.3% against the greenback. Market participants are currently waiting for the consumer confidence index due later in the day.

The pound sterling was flat against the US currency after the Bank of England held its interest rates steady, in line with market expectations. The central bank held rates steady at 4.75% amid "worse than expected" economic conditions.

The commodity-linked currencies of Canada, Australia and New Zealand were each down 0.1% against the dollar due to a fall in crude oil prices. Oil prices extended their fall from Thursday, as central bankers in the US and Europe hinted at caution over further easing of monetary policy, amid weak economic activity hampering demand for the commodity next year. Brent crude oil prices have declined almost 2% this week. 

At 1516 IST, the price of February Brent crude on the Intercontinental Exchange was $72.16 per barrel, compared with its previous close of $72.88 per barrel on Thursday and $73.39 per barrel on Wednesday.  (Gowri Lakshmi)

India Rupee: Rises above 85/$ after erasing all losses on FX inflows

MUMBAI – The rupee erased all losses and rose above 85 a dollar after banks sold the greenback for foreign fund inflows as well as for exporters, dealers said. They said some foreign fund inflows were on account of the FTSE readjustment which is coming into effect from Dec. 23.

"There are some index flows (FTSE), and then exporters also sold after they saw the central bank was not letting the rupee fall past 10 (85.10 a dollar)," a dealer with a foreign bank said. 

As a result of the periodic readjustment in the FTSE index, Nuvama expects foreign flows to the tune of around $310 million into ICICI Bank, with Kotak Mahindra Bank, Bajaj Finance, Prestige Estates, Nexus Select, and others also attracting significant flows. Kotak Mahindra Bank is expected to attract inflows of $118 million.

Apart from such overseas flows, the rupee also got support from exporters, who sold the greenback, noting higher dollar/rupee levels, dealers said. They said exporters refrained from selling the greenback in the morning, hoping the dollar/rupee would rise even further. However, as the Reserve Bank of India intervened in the market by selling dollars, it restricted the upward movement in the dollar/rupee to about 85.10 a dollar. Therefore, the lack of further upward movement in the dollar/rupee prompted them to sell dollars, which pushed the rupee higher, dealers said. 

A surge in the dollar index, however, limited the rise in the Indian rupee, dealers said. The dollar index hit its highest level in over two years on Friday after data showed the US economy grew more than expected, which supported the view that the US Federal Reserve may slow down its pace of rate cuts in 2025, dealers said. 

The dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 108.13 after hitting an over two-year-high of 108.54 earlier in the day. The index was at 108.43 on Thursday and 108.20 on Wednesday.

For the rest of the day, the rupee is likely to move in a range of 84.90-85.10 against the dollar. Dealers see strong immediate technical resistance for the Indian unit at 84.90 a dollar.  (Sourabh Kumar)

India Rupee: Remains steady; RBI likely dlr sales offset importers' dlr buys

MUMBAI – The rupee remained largely steady against the dollar as banks sold the greenback likely on behalf of the Reserve Bank of India, which offset the impact of banks' dollar purchases for oil and other importers, dealers said. The Indian unit has moved in a range of 7 paise so far during the day. 

The rupee came under pressure as oil marketing companies rushed to purchase dollars, noting a fall in crude oil prices. "Oil prices have come down. So, importers are now in a panic to purchase (dollars) before the prices rise again," a dealer at a private bank said. 

Oil prices were slightly down on Friday, extending their fall from Thursday, as central bankers in the US and Europe hinted at caution over further easing of monetary policy, amid weak economic activity hampering demand for the commodity next year. Brent crude oil prices have declined almost 2% this week. At 1227 IST, the price of February Brent Crude on the Intercontinental Exchange was $72.60 per barrel, compared with its previous close of $72.88 per barrel on Thursday and $73.39 per barrel on Wednesday.

Further, some banks bought the greenback on behalf of importers, fearing a further depreciation in the rupee, which also weighed on the Indian unit, dealers said. The Indian unit touched a record low of 85.1000 a dollar earlier in the day. 

However, some banks sold the greenback likely on behalf of the Reserve Bank of India, which prevented the rupee from falling sharply, dealers said. "The rupee isn't moving from a particular level. RBI is aggressively selling (dollars). They (RBI) are protecting the rupee from inching toward 85.15 a dollar," a dealer at a private bank said. 

Some banks also sold the greenback on behalf of exporters, which provided some cushion to the local currencies, dealers said. Noting the central bank's aggressive intervention, some exporters sold the greenback on expectation that the Indian unit may not depreciate a lot here on. 

For the rest of the day, the rupee is likely to move in a range of 85.00-85.15 against the dollar. Dealers see strong immediate technical support for the Indian unit at 85.10 a dollar.  (Gowri Lakshmi)

India Rupee: Technical Levels for rupee - Dec 20

MUMBAI – At 1139 IST, the rupee was at 85.0875 per dollar. At 0900 IST, the rupee was at 85.0625 a dollar against its previous close of 85.0700. The following are the key support and resistance levels for the rupee as provided by leading banks and brokerages:

(Pratiksha and Sourabh Kumar)

India Rupee - Asia FX:Most dn; dlr index at over 2-yr high post US econ data

MUMBAI – Most Asian currencies were down against the dollar Friday as the dollar index hit its highest level in over 2 years after strong economic data in the US reinforced expectations of fewer rate cuts by the US Federal Reserve going ahead. The dollar index had already been rising after the US Federal Open Market Committee indicated a slower pace of rate cuts in 2025, after slashing rates by 25 basis points early Thursday. 

The dollar index surged after data showed the US economy grew more than expected in Jul-Sept, while weekly jobless claims fell more than expected. The data showed that the number of Americans filing for unemployment benefits fell by 22,000 to 220,000 in the week ended Saturday. A poll by Reuters had forecast 230,000 claims for the latest week. US GDP increased at an upwardly revised 3.1% annualised rate in Jul-Sept after expanding 2.8% last quarter. At 1115 IST, the dollar index which measures the strength of the dollar against six major currencies was at 108.46, compared to 108.43 on Thursday and 108.20 on Wednesday. The index touched a high of 108.49 earlier in the day, its highest level since November 2022.

The South Korean won was down 0.3% against the dollar, tracking losses in the domestic equity market. At 1030 IST, the benchmark index KOSPI was down 1.74%.

The Taiwan dollar was down 0.1% against the greenback. Taiwan's central bank left its key interest rates unchanged on Thursday. However, the central bank raised Taiwan's GDP growth projection to 3.13% for next year. 

The Chinese yuan was flat against the greenback as the People's Bank of China kept its benchmark lending rates unchanged, in line with market expectations. The Malaysian ringgit was down 0.2% against the dollar. 

The Philippines peso was up 0.2% against the dollar, tracking gains in domestic equities. At 1023 IST, the benchmark index, the PSEi index, was up 1.3%. However, gains in the currency were limited as the central bank of the Philippines lowered its interest rates by 25 bps on Thursday, for the third consecutive time and signalled future rate cuts of the same magnitude.

The Indonesian rupiah was up 0.1% against the greenback after news reports said that Indonesia has unveiled an economic stimulus package of $51.65 billion for 2025 to tackle economic shocks and the weakening purchasing power of low-and middle-income groups, reports said. Further, the central bank intervened in the foreign exchange market to prevent excess volatility early Friday, a Bloomberg report said. "We will guard the rupiah boldly to build market confidence," Bank Indonesia Executive Director for Monetary and Asset Securities Management Edi Susianto said. (Gowri Lakshmi)

India Rupee: At record low on importers' dlr buys; rise in dlr index weigh

MUMBAI – The rupee hit a lifetime low of 85.1000 against the dollar Friday as banks purchased greenback on behalf of importers, dealers said. The local unit also came under pressure as the dollar index jumped to an over-two-year high after data showed a strong labour market, they said. 

"The rupee has buying (of dollars) pressure, mostly because the dollar index strengthened. But we expect it to be range bound, but we see a fall to 85.11 during the day," a dealer at a public sector bank said. "But volumes will remain low. The US is going on holidays, we only see less volume from today onwards," he added.

The dollar index surged to an over-two-year high as data on Thursday showed that the initial jobless claims surprisingly fell, pushing back the expectations of a rate cut by the US Federal Reserve. The claims showed that the number of Americans filing for unemployment benefits fell by 22,000 to 220,000, below analysts' estimates of 229,000.

The strong labour market data bolstered the dollar index to a fresh over two-year high of 108.49 before closing at 108.43 on Thursday and 108.20 on Wednesday. At 1006 IST, the dollar index, which measures the strength of the dollar against six major currencies was at 108.84.

"There are no big data figures the market is waiting for during the market hours, so volatility should be less," a dealer at a state-owned bank said.

Dealers expect exporters to sell dollars to take advantage of the relatively higher dollar/rupee levels, as the rupee is seen to appreciate in the coming week due to inflows into the domestic equity market and the market settling down after assessing upcoming data from the US and other global cues. 

Traders are currently waiting for the personal consumption data from the US, with analysts estimating a 0.2% rise in November, against the 0.3% rise in October.

During the day, the rupee is likely to move in a range of 85.00-85.15 against the dollar. Dealers see strong immediate technical support for the Indian unit at 85.10 a dollar. (Gowri Lakshmi)

India Rupee: Expected range for rupee - Dec 20

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 Avishek Dutta

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