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Informist, Monday, Dec. 30, 2024

 

By Gowri Lakshmi

 

MUMBAI – The rupee ended steady against the dollar Monday as importers purchased the greenback, which offset banks' dollar sales on behalf of overseas investors, dealers said. They said exporters also sold the US unit at higher dollar/rupee levels, which aided the rupee.

 

"There was some selling, likely for FPIs (foreign portfolio investors), but then importers came in," a dealer with a private bank said. After rising to a high of 85.4200, the rupee erased all the gains and settled at a new closing low of 85.5350 a dollar, marginally lower than Friday's close of 85.5325 a dollar.

 

A rise in most Asian currencies also supported the rupee. Barring the Philippines peso and the South Korean won, both of which fell, other Asian currencies rose 0.1%-0.6%.

 

The overall trade volume remained lacklustre as most traders were on leave owing to the holiday season, dealers said. Dealers also said the central bank did not intervene in the domestic spot market aggressively, hinting that the rupee will continue to depreciate at a gradual pace.

 

"The RBI (Reserve Bank of India) seems to have shifted their intervention strategy," a dealer at a broking firm said. "Slowly they (the RBI) are allowing the market to determine the rupee's movement," the dealer added.

 

The rupee opened steady at 85.5300 against the dollar in the domestic spot market following easing of the Dollar Index during Asian trade, which offset banks' dollar purchases for importers, dealers said. Importers rushed to purchase the greenback as soon as the market opened, wary of a further fall in the domestic unit, they said.

 

Apart from fearing a further fall in the rupee, some importers demanded dollars to meet their month-end payment obligations, dealers said. "The pressure on the rupee is clearly from importers' dollar demand. They are always there... since it is the month-end, they are here for the payments for which they have to buy (dollars), no matter what," a dealer at a private bank said.

 

As the rupee came under pressure, some public-sector banks stepped in with dollar sales, probably on behalf of the RBI, which prevented the rupee from falling sharply. However, they said, the central bank may not have sold dollars aggressively to prevent a sharp fall in the rupee. On Monday, the domestic currency moved around 17 paise against the greenback.

 

Some banks sold dollars on behalf of exporters, who sold the greenback to meet their month-end and year-end payment obligations. Dealers also said most exporters were waiting for the rupee to fall further, as the Indian currency went as low as 85.80 a dollar on Friday.

 

An easing of the Dollar Index during the early part of trade also aided the rupee. The Dollar Index remained steady for the rest of the day ahead of the US Purchasing Managers' Index and the weekly jobless data due Thursday. Traders will also assess the US Johnson Redbook Retail Sales Index for the week ended Dec. 28, due to be released Tuesday. At 1530 IST, the Dollar Index, which measures the strength of the greenback against six major currencies, was at 107.90, compared to its close of 108.01 on Friday and 108.08 on Thursday.

 

The rupee also found support from some foreign fund inflows, pushing it higher to the day's high of 85.4200 a dollar. Some foreign banks sold the greenback on behalf of overseas investors for investment in domestic equities, dealers said. Some dealers also said some foreign fund inflows were related to foreign currency non-resident (bank) accounts.

 

	AT 1530 IST	AT 0900 IST	HIGH	LOW	PREVIOUS (AT 1530 IST)
Spot rupee per $1	85.5350	85.5300	85.4175	85.5925	85.5325
1-year dlr/rupee fwd (paise)	211.02	206.06	211.04	200.04	205.50

 

FORWARDS

The premium on the one-year dollar/rupee forward contract closed near a 21-month high Monday owing to banks' dollar sales for forward delivery on behalf of importers, dealers said. They, however, said the rise in the premium was capped by a rise in the 10-year benchmark US Treasury yield.

 

Importers purchased the greenback for forward delivery, noting sharp downward movement in the rupee in the spot market Friday. The rupee fell nearly 50 paise on Friday, logging its biggest single-day fall in seven months.

 

With the forward premium at such a high level, a few banks took advantage and sold dollars for forward delivery, dealers said. 

 

Since liquidity in the banking system remained in deficit, the dollar/rupee overnight swap rate rose sharply Monday. According to RBI data, the liquidity deficit was INR 1.83 trillion Sunday as compared to INR 1.85 trillion Saturday and INR 1.91 trillion Friday.

 

On an annualised basis, the one-year dollar/rupee forward premium ended near a 21-month high of 2.47% Monday against Friday's 2.40%. At 1530 IST, it was 211.02 paise against Friday's 205.50 paise.

 

OUTLOOK

On Tuesday, the rupee will take cues from movement in the Dollar Index and crude oil prices, dealers said. They expect importers to continue purchasing the greenback, fearing a further fall in the rupee, which itself may weigh on the domestic unit. They also expect the RBI to intervene in the market with dollar sales to prevent the rupee from falling sharply and curb any sudden volatility. 

 

Dealers said the trade volume will be lacklustre due to the ongoing holiday season and the market will only pick up momentum next week. Many markets in Asia and Europe will be shut for New Year's Eve. The London Stock Exchange will close earlier Tuesday ahead of New Year.

 

The rupee Tuesday is seen in a range of 85.50-85.80 a dollar, with strong technical support pegged at 85.60 a dollar.

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India Rupee - World FX: Euro dn despite ECB member hinting rate cut delayed

 

	AT 1457 IST	HIGH	LOW	PREVIOUS
GBP/USD	1.2571	1.2589	1.2562	1.2569
EUR/USD	1.0415	1.0435	1.0410	1.0424
NZD/USD	0.5649	0.5664	0.5632	0.5633
AUD/USD	0.6222	0.6247	0.6216	0.6205
USD/JPY	157.9170	158.0710	157.7040	157.8700
USD/CAD	1.4396	1.4414	1.4386	1.4416
EUR/JPY	164.5020	164.9030	164.4016	164.6184
CHF/USD	1.1066	1.1095	1.1059	1.1073
EUR/CHF	0.9411	0.9419	0.9400	0.9411

 

MUMBAI – The euro was down 0.1% against the US dollar amid thin trading volume even after European Central Bank Governing Council member Robet Holzmann said on Saturday that the bloc's central bank might take longer to lower interest rates further after a recent uptick in inflation. Annual inflation in the Eurozone rose to 2.2% in November from 2.0% the previous month. "I don't see any interest rate hikes at the moment. What could happen, though, is that one takes more time until the next interest rate cut," Holzmann said.

 

The pound sterling was down 0.1% against the greenback amid thin trading due to the ongoing holiday season. Market participants are now waiting for the UK December house price index, due on Thursday. The London Stock Exchange will close early on Tuesday on account of New Year's Eve.

 

The Japanese yen was flat against the dollar during the European trading session. However, in Asian trade, the yen fell against the US unit after data on Monday showed that the country's factory activity shrank at a slower pace in December. The December purchasing manager's index rose slightly to 49.6, from 49.0 in November. A reading below 50 indicates contraction in economic activity. Financial markets in Japan will be shut on Tuesday on account of New Year's Eve.

 

The Australian dollar was up 0.1% against the greenback. However, gains in the currency were limited as the offshore Chinese yuan fell 0.1% against the US unit after the People's Bank of China governor hinted at more room for monetary policy easing. Tracking a fall in the Chinese yuan, the New Zealand dollar was down 0.3%. Any change in the Chinese economy directly influences the currencies of Australia and New Zealand due to their close trade relations. 

 

The dollar index eased slightly from its near two-year high as market participants await key PMI data and weekly jobless claims data on Thursday. Traders will also assess the US Johnson Redbook Retail sales Index for the week ended Dec. 28, which is due on Tuesday. At 1452 IST, the dollar index, which measures the strength of the dollar against six major currencies, was at 108.08, compared to its previous close of 108.01 on Friday and 108.08 on Thursday.  (Gowri Lakshmi)

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 India Rupee: Rises slightly as banks sell dollars likely for RBI, exporters

 

	AT 1201 IST	AT 0900 IST	HIGH	LOW	PREVIOUS (AT 1530 IST)
Spot rupee per $1	85.4600	85.5300	85.4450	85.5300	85.5325

 

MUMBAI – The rupee rose slightly against the dollar as state-owned banks sold the greenback, likely on behalf of the Reserve Bank of India and exporters, dealers said. "RBI intervention is clearly there; nats (nationalised banks) are selling (dollars). With the kind of movement we saw on Friday, RBI intervention has been active, the rupee will likely remain range-bound today (Monday) as well, and won't breach the big figure, at least not until next week," a dealer at a private bank said. 

 

Dealers said banks sold dollars on behalf of exporters, who wanted to meet their month-end and year-end payment obligations, which supported the local currency. Further, the dollar index eased slightly, falling below the 108-mark, which also gave some relief to the domestic currency, they said. At 1117 IST, the dollar index, which measures the strength of the dollar against six major currencies, was at 107.99, compared to 108.01 on Friday and 108.08 on Thursday.

 

A rise in most Asian currencies also supported the rupee, dealers said. Most Asian units rose between 0.1-0.5% against the dollar. Meanwhile, trade volume in the currency market remained lacklustre as most traders were on leave due to the ongoing holiday season, they said. 

 

The rupee was weighed down by dollar purchases by banks on behalf of importers, who feared a further fall in the domestic unit, dealers said. Dollar demand from importers also increased owing to their month-end payment obligations, they said. 

 

Market participants now await China's purchasing managers' index due Tuesday, and the US weekly jobless data due Thursday. For the rest of the day, the rupee is likely to move in a range of 85.30-85.85 against the dollar. Dealers see strong immediate technical resistance for the Indian unit at 85.35 a dollar.  (Gowri Lakshmi)

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India Rupee: Technical Levels for rupee - Dec. 30

 

MUMBAI – At 1205 IST, the rupee was at 85.4600 per dollar. At 0900 IST, the rupee was at 85.5300 a dollar against its previous close of 85.5325. The following are the key support and resistance levels for the rupee as provided by leading banks and brokerages:

 

Participants	S2	S1	R1	R2
Private bank	85.96	85.80	85.20	85.10
Private bank	85.75	85.42	85.35	85.00
Brokerage firm	85.95	85.80	84.30	84.20

 

(Pratiksha and Sourabh Kumar)

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India Rupee - Asia FX: Mixed ahead of China, US econ data; Thai baht up 0.5%

 

MUMBAI – Asian currencies traded on a mixed note on Monday amid holiday-thinned trade volumes, as market participants await China's purchasing managers' index factory surveys, due Tuesday, and the US ISM survey for December, due Friday. 

 

The Thai baht was up 0.5% against the greenback after the government announced a long-debated minimum wage increase across the country as a measure to spur economic growth by boosting domestic spending and supporting the workforce. Starting Jan. 1, the daily wage in the country will rise by 2.9%, ranging $9.90-11.72, with Prime Minister Paetongtarn Shinawatra expressing optimism about achieving over 3% growth in the coming year.

 

The Indonesian rupiah was up 0.4% against the US unit after the central bank announced measures to stabilise the rupiah. Bank Indonesia on Friday announced that it will stabilise the currency next year primarily by purchasing government bonds from the secondary market. The central bank's decision came after consultation with Finance Minister Sri Mulyani Indrawati, reports said. 

 

The South Korean won was flat against the US dollar, recovering from a 16-year low hit on Friday. Data on Monday showed the country's factory output fell more sharply than expected amid slowing exports and weakening business confidence. The industrial output index fell 0.7% in November, against the forecast of 0.4% in a Reuters poll, which weighed on the currency. The Taiwan dollar and Malaysian ringgit were also flat against the dollar.

 

The Philippine peso was down 0.2% against the greenback, tracking a fall in domestic equities. At 0934 IST, the PSEi Index was down 0.2%. The Philippines' central bank data showed that more short-term foreign investments flowed into the country in November. Foreign investments posted a rise in gross inflow by 18.2% to $1.86 billion in November, compared to $1.57 billion for the same period a year ago. Data also showed a net inflow of $96.59 million, against the $529.68 million outflow in October.

 

The Chinese yuan was flat against the greenback. On Monday, People's Bank of China Governor Pan Gongsheng hinted that the central bank has still more room for monetary policy easing. "Monetary policy adjustments should be intensified. The average deposit reserve ratio for Chinese banks is around 6.6%. Compared to central banks in other major economies, this level still leaves room for adjustment," Gongsheng said. Gongsheng also said that the central bank would not cut rates aggressively either to curb the risk of a falling yuan.  (Gowri Lakshmi)

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India Rupee: Steady as importers' dlr buys offset RBI's likely intervention

 

	AT 0938 IST	AT 0900 IST	HIGH	LOW	PREVIOUS (AT 1530 IST)
Spot rupee per $1	85.5125	85.5300	85.4750	85.5300	85.5325

 

NEW DELHI – The rupee was largely steady against the dollar as dollar purchases by banks on behalf of importers offset the impact of the Reserve Bank of India's likely intervention through dollar sales in the offshore non-deliverable forwards, dealers said. 

 

"The way they (RBI) have sold (dollars) on Friday, the market is just trying to settle down from that," said a dealer at a state-owned bank. "It (rupee) rose sharply in offshore but buying (of dollars) has brought it down. The market is looking for direction from here, but I think rupee will remain range-bound today."

 

The RBI likely sold dollars in the domestic spot market heavily on Friday during the last leg of trade, following which the rupee recovered from its lifetime low of 85.8075 a dollar and went on to settle at 85.5325 a dollar. Dealers said dollar sales by the central bank are likely to have continued in the offshore NDF market as well, following which the rupee rose to as high as 85.30 a dollar in the segment. 

 

Meanwhile, banks bought dollars on behalf of importers, who fear further depreciation in the Indian unit going ahead, which weighed on the Indian unit, dealers said. Importers may also buy dollars to meet their month-end payment requirements, they said. 

 

Back home, data released on Friday showed India's current account deficit widened to $11.16 billion in Jul-Sept from a deficit of $10.22 billion in Apr-Jun and a surplus of $4.59 billion in Jan-Mar. The deficit was $11.26 billion in the second quarter of 2023-24 (Apr-Mar). In percentage terms, the current account deficit in Jul-Sept amounted to 1.2% of GDP, against 1.3% a year ago. This dampened currency traders' sentiment, dealers said.

 

During the day, the rupee is likely to move in a range of 85.40-85.60 against the dollar. Dealers see strong immediate technical support for the Indian unit at 85.60 a dollar.  (Pratiksha)

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India Rupee: Expected range for rupee - Dec. 30

 

NEW DELHI – Following are the expected support and resistance levels for the rupee on Monday, as forecast by leading banks and brokerages in an Informist poll:

 

PARTICIPANT	SUPPORT	RESISTANCE
Foreign bank	85.70	85.30
Private bank	85.60	85.35
Brokerage firm	85.60	85.30
Brokerage firm	85.60	85.30
Brokerage firm	85.49	85.21

 

 

 

 

 

 

 

 

 

(Pratiksha and Gowri Lakshmi)

 

End

 

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

 

Edited by Rajeev Pai

 

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