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Informist, Wednesday, Jan. 22, 2025

 

By Gowri Lakshmi

 

MUMBAI – The rupee ended sharply higher, at a near two-week high, Wednesday as banks sold the greenback for foreign fund inflows into domestic equities and the gilt market, dealers said. The dollar index fell soon after the European markets opened, which also supported the rupee, they said.

 

"After the initial buying pressure (of dollars), nats (nationalised banks) continued to sell, then some foreign banks sold for some inflows, which supported the rupee," a dealer at a foreign bank said. Banks had sold the greenback on behalf of the Reserve Bank of India in early trade when the rupee was under pressure from importers' dollar demand, dealers said.

 

Rising 0.3% against the US unit, the rupee settled at 86.3225 against the dollar, the highest level since Jan. 10. On Tuesday, the Indian currency had closed at 86.5775 to the dollar. On Wednesday, the rupee moved in a relatively wide range of 28 paise.

 

Opening broadly flat against the dollar at 86.5750, the rupee hardly moved in the first couple of hours. However, it experienced some pressure from banks' dollar purchases on behalf of oil marketing companies and other importers. Some banks also purchased the greenback to meet payment obligations for the expiry of their futures contracts.

 

Dealers said oil marketing companies purchased the greenback on a fall in crude oil prices. "Oil companies have come to purchase since (oil) prices have come down a bit," said a dealer at a public-sector bank. "The likelihood of prices rising is higher than the likelihood of prices falling (from here). Now that Trump has taken over, his tweets will move markets and determine prices."

 

Crude oil prices fell after Hamas militants and Israeli forces entered a truce. They declined further after Trump announced plans to boost US petroleum output. At 1530 IST, the March Brent Crude contract on the Intercontinental Exchange was at $79.75 per barrel, compared to its previous close of $79.29 per barrel on Tuesday and $80.15 Monday.

 

Importers purchased the greenback to stock up their dollar holdings, fearing the dollar/rupee will go up in coming weeks, dealers said. A fall in the offshore Chinese yuan also weighed on the rupee. The Chinese yuan came under pressure as reports indicated that Trump may impose an additional 10% tariff on imports from China from Feb. 1.

 

However, public-sector banks sold the greenback, possibly on the RBI's behalf, which offset the impact of banks' dollar purchases, dealers said. "The RBI has been selling aggressively, the journey to 87 will be really tough," a dealer at a private bank said. Others, however, were of the view that the RBI's intervention in the foreign exchange market has been mild of late.

 

Further, some foreign banks stepped in with dollar sales on behalf of foreign portfolio investors, which further cushioned the local currency, dealers said. They said foreign fund inflows into the Indian debt and equity markets were also seen. Both the benchmark indices, the Nifty 50 and the BSE Sensex, ended in the green Wednesday.

 

The rupee also got a boost as the dollar index declined to an over-two-week low during Indian market hours. The index fell due to the strengthening euro and as traders awaited further plans and the implications of Trump's tariff policies. At 1530 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 107.84, compared to its previous close of 108.10 on Tuesday and 108.07 on Monday.

 

	AT 1530 IST	AT 0900 IST	HIGH	LOW	PREVIOUS (AT 1530 IST)
Spot rupee per $1	86.3225	86.5750	86.3050	86.5950	86.5775
1-year dlr/rupee fwd (paise)	196.30	204.89	204.89	195.61	203.35

 

FORWARDS

Premiums on the dollar/rupee forward contract ended down across tenures Wednesday as the Reserve Bank of India is likely to have sold forward dollars for maturity in May and July, dealers said. The Reserve Bank of India possibly sold forward dollars to offset the impact of its spot dollar sales on the rupee liquidity. The central bank is likely to have sold the greenback in the spot market in early trade Wednesday, as the rupee was under pressure from importers' dollar demand, dealers said.

 

Over the past month, while the RBI's interventions in the foreign exchange spot market have been relatively less aggressive, its actions have continued to exert a negative impact on rupee liquidity.

 

At 1530 IST, the premium on the one-year exact-period dollar/rupee forward contract was 196.30 paise, against 203.35 paise Tuesday. On an annualised basis, the premium was 2.26%, against Tuesday's close of 2.34%.

 

OUTLOOK

On Thursday, the rupee will take cues from the movement in the dollar index and crude oil prices, dealers said. The rupee may also take cues from the movement in the offshore Chinese yuan and the Japanese yen. "The next two days will be crucial. The Bank of Japan is likely to raise (interest) rates and the dollar index will take cues from it, and the dollar-rupee movement may follow that," a dealer at a state-owned bank said.

 

Dealers said they expect importers to continue purchasing the greenback, noting the relatively lower dollar/rupee levels. However, they also expect the RBI to step in with dollar sales to curb excessive market volatility or if the local unit comes under immense pressure.

 

During the day, the rupee is seen in a range of 86.20-86.60 a dollar, with strong technical resistance pegged at 86.25 a dollar.

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India Rupee - World FX: Euro rises 0.2% after ECB Lagarde's comments

 

	AT 1530 IST	HIGH	LOW	PREVIOUS
GBP/USD	1.2370	1.2376	1.2312	1.2353
EUR/USD	1.0453	1.0457	1.0393	1.0428
NZD/USD	0.5684	0.5687	0.5650	0.5667
AUD/USD	0.6290	0.6293	0.6253	0.6271
USD/JPY	155.7640	156.1120	155.3560	155.5050
USD/CAD	1.4311	1.4354	1.4306	1.4317
EUR/JPY	162.8270	162.8420	161.8960	162.0650
CHF/USD	1.1068	1.1072	1.1019	1.1039
EUR/CHF	0.9444	0.9452	0.9430	0.9445

 

MUMBAI – The euro rose 0.2% against the dollar after European Central Bank President Christine Lagarde said Wednesday that the bloc's central bank is not lowering its benchmark rates too slowly and will continue its measured approach towards the monetary policy easing cycle. "We do not see ourselves behind the curve," Lagarde told CNBC. "We are on this sort of regular, gradual path."

 

Earlier Wednesday, Dutch central bank chief Klaas Knot told Bloomberg Television that he is comfortable with market bets for rate cuts at the next two meetings but said he is "not convinced yet that we need to go into stimulative mode". The ECB policy meeting is due at the end of the month.

 

The Japanese yen was down 0.1% against the greenback ahead of the Bank of Japan's monetary policy committee meeting scheduled to begin Thursday. The BoJ is widely expected to announce an interest rate hike Friday.

 

The dollar index fell to an over two-week low during European trade tracking a rise in the euro and as traders awaited further implications and hints on US President Donald Trump's tariff policies. At 1504 IST, the index which measures the strength of the dollar against a basket of six major currencies was at 107.96, compared with its previous close of 108.10 on Tuesday and 108.07 Monday. The pound sterling also gained 0.2% against the dollar. 

 

The New Zealand dollar was down 0.1% against the US unit owing to a fall in the Chinese yuan. Data on Wednesday showed that New Zealand's CPI remained steady at 2.2% on year in Oct-Dec, staying within the target range of 1-3%. The data reinforced the view that the Reserve Bank of New Zealand may opt for a jumbo rate cut in February.

 

The Australian dollar and the Swiss franc were up 0.3% against the greenback, while the Canadian dollar was down 0.1% after Trump announced the imposition of tariffs on Canada by Feb. 1. On Wednesday, Canada's Prime Minister Justin Trudeau told Washington firmly that Ottawa is "willing to inflict economic pain on the US to get Trump to back down".  (Gowri Lakshmi)

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India Rupee: Rises sharply as foreign banks sell dollars for FX inflows

 

	AT 1420 IST	AT 0900 IST	HIGH	LOW	PREVIOUS (AT 1530 IST)
Spot rupee per $1	86.4175	86.5750	86.4025	86.5950	86.5775

 

MUMBAI – The rupee rose sharply against the dollar as some foreign banks sold dollars, possibly for foreign fund inflows, dealers said. "There was a sudden move (in the rupee). We are seeing foreign banks on offer for their flows," said a dealer at a private bank.

 

Some banks also continuously sold the greenback to cut existing long dollar bets amid looming uncertainty over US President Donald Trump's tariff policies, which aided the Indian currency, dealers said. At 1420 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 108.03, compared to 108.10 on Tuesday and 108.07 Monday.

 

Earlier in the day, the Indian currency was also supported by banks' greenback sales, likely on behalf of the Reserve Bank of India, dealers said. The central bank is likely to have sold dollars at around 86.59 a dollar earlier in the morning, and has possibly intervened sporadically at different dollar/rupee levels since. However, the RBI's intervention was relatively 'mild', they said. "The pressure (of buying dollars) from importers we saw in the morning has come down, but selling (of dollars by the RBI) is continuing and volumes remain moderate, too," a dealer at a state-owned bank said.

 

Dealers said dollar demand on behalf of oil marketing companies, noting the fall in crude oil prices, weighed on the local unit. Crude oil prices fell after Hamas militants and Israeli forces entered into a truce, and declined further after Trump announced plans to boost US petroleum output. At 1420 IST, the March Brent Crude contract on the Intercontinental Exchange was at $79.05 per barrel, compared to its previous close of $79.29 per barrel on Tuesday and $80.15 Monday.

 

The onshore Chinese yuan fell 0.2% against the dollar after Trump said late Tuesday that his administration was discussing the imposition of a 10% tariff on goods imported from China on Feb. 1. This, too, exerted pressure on the Indian currency, dealers said. 

 

For the rest of the day, the rupee is seen moving in a range of 86.35-86.60 against the dollar. Dealers see immediate technical resistance for the Indian unit at 86.40 a dollar.  (Gowri Lakshmi and Pratiksha)

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India Rupee: Premiums dip on RBI's forward dollar sales as liquidity deficit widens

 

	AT 1354 IST	AT 0900 IST	HIGH	LOW	PREVIOUS (AT 1530 IST)
Spot rupee per $1	86.5000	86.5750	86.5000	86.5950	86.5775
1-year dlr/rupee fwd (paise)	197.30	204.89	204.89	195.61	203.35

 

MUMBAI – Premiums on the dollar/rupee forward contract fell across tenures Wednesday as the Reserve Bank of India is likely to have sold forward dollars for maturity in May and July, dealers said.

 

"The RBI is doing buy/sell on a daily basis now," a dealer with a private bank said. "The premiums had also risen quite a lot, and I think they will continue doing such sales."

 

The Reserve Bank of India had likely sold forward dollars to offset the impact of its spot dollar sales on the rupee liquidity. The central bank is likely to have sold the greenback in the spot market in early trade Wednesday, as the rupee was under pressure from importers' dollar demand, dealers said.

 

Over the past month, while the RBI's interventions in the foreign exchange spot market have been relatively less aggressive, its actions have continued to exert a negative impact on rupee liquidity. "Therefore, the central bank has been continuously conducting buy/sell swaps," the dealer with the private bank said. On Tuesday, the net liquidity injected by the RBI--a proxy for systemic liquidity conditions--rose to INR 2.71 trillion against INR 2.36 trillion Monday, as per data from the central bank.

 

However, the fall in premiums was limited by downward movement of the 10-year benchmark US Treasury yield Tuesday. The 10-year US Treasury yield settled lower by 4 basis points at 4.57% on Tuesday, after US President Donald Trump did not announce any immediate tariff measures on his first day in office Monday.

 

At 1352 IST, the premium on the one-year exact-period dollar/rupee forward contract was 197.30 paise, against 203.35 paise Tuesday. On an annualised basis, the premium was 2.27%, against Tuesday's close of 2.34%.  (Sourabh Kumar)

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India Rupee: Technical Levels for rupee - Jan 22

 

MUMBAI – At 1132 IST, the rupee was at 86.5625 per dollar. At 0900 IST, the rupee was at 86.5750 a dollar against its previous close of 86.5775. Following are the key support and resistance levels for the rupee as provided by leading banks and brokerages:

 

Participants	S2	S1	R1	R2
State-owned bank	86.90	86.75	86.45	86.30
State-owned bank	86.67	86.62	86.20	86.00
Brokerage firm	86.80	86.65	86.20	86.00

 

(Sourabh Kumar and Pratiksha)

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India Rupee: Steady as likely RBI dollar sales offset importers' dollar buys

 

	AT 0925 IST	AT 0900 IST	HIGH	LOW	PREVIOUS (AT 1530 IST)
Spot rupee per $1	86.5650	86.5750	86.5750	86.5950	86.5775

 

MUMBAI – The rupee was steady against the dollar Wednesday as banks' dollar sales likely on behalf of the Reserve Bank of India offset the downward impact of banks' dollar purchases for importers, dealers said. "The market is moving only in one direction, there is just buying and very limited selling. Importers, corporates, expiry (of contracts), everything is on the buy (of dollar) side," a dealer at a state-owned bank said.

 

Importers purchased the greenback, as they anticipated the rupee to fall further in coming weeks, dealers said. Some dollar demands were also to meet the payment requirement for futures contract expiry, they said. 

 

A fall in the offshore Chinese yuan also weighed on the local unit. The Chinese yuan fell 0.3% against the dollar in Asian trade after reports said that US President Donald Trump and his team were discussing a 10% tariff on China which will take effect as early as Feb. 1.

 

However, some banks stepped in with its dollar sales, likely on behalf of the central bank, which aided the rupee, dealers said. Though the intervention was relatively 'mild' in nature, dealers said. They said a rise in domestic equities also aided the domestic currency. At 0957 IST, the benchmark indices, the Nifty 50 and the Sensex were up 0.5% and 0.3%, respectively. 

 

The dollar index remained steady as market participants await any tariff measures by President Trump. At 0959 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 108.09, compared to its previous close of 108.10 on Tuesday and 108.07 on Monday. 

 

During the day, the rupee is seen moving in a range of 86.40-86.70 against the dollar. Dealers see immediate technical support for the Indian unit at 86.60 a dollar.  (Gowri Lakshmi)

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India Rupee - Asia FX: Mixed; Malaysian ringgit up as policy rate seen unch

 

MUMBAI – Asian currencies were mixed against the dollar in early trade as investors cautiously waited for any announcement on the imposition of tariffs by the newly sworn-in US President Donald Trump. He did not make any big announcements on imposing tariffs on the first day of office, unlike what market participants had anticipated.

 

The dollar index was also steady. The index, which measures the strength in the greenback against a basket of six major currencies, was at 108.10 at 0819 IST, the same as on Tuesday and largely unchanged from Monday's 108.07.

 

The Malaysian ringgit was up 0.6% against the greenback in early trade as the country's central bank is widely expected to hold the benchmark rate steady at 3.00%. The Taiwan dollar was down 0.1% against the greenback. The fall was limited as data released on Tuesday showed that exports from Taiwan in December rose the fastest in about three years. They were up 20.8% on year at $52.92 billion in December.

 

The Philippines peso was down 0.1% against the greenback as the country registered a sharply lower balance of payments surplus at $609 million last year compared with the central bank's target of $3.5 billion and a surplus of $3.67 billion in 2023.

 

The South Korean won rose 0.1% against the US currency due to improvement in the country's consumer sentiment in January. The sentiment, measured by the central bank's composite consumer sentiment index, stood at 91.2 in January after falling to 88.2 in December due to political turmoil as then president Yoon Suk Yeol had declared martial law.

 

The Indonesian rupiah and the Thai baht were each up 0.1% against the US dollar. Market participants now await the release of US Redbook retail sales data later in the day. Data on weekly unemployment claims in the US is due on Thursday, and this may lend cues to the rate trajectory of the US Federal Reserve.  (Sourabh Kumar)

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India Rupee: Expected range for rupee - Jan 22

 

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

 

PARTICIPANT	SUPPORT	RESISTANCE
Private bank	86.62	86.48
Foreign bank	86.70	86.50
Foreign bank	86.65	86.30
Brokerage firm	86.65	86.50

 

 

 

 

 

 

 

 

(Sourabh Kumar 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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