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Informist, Friday, Aug 23, 2024

By Sourabh Kumar

MUMBAI – The rupee ended the day slightly higher against the dollar as banks sold the greenback for foreign fund inflows into domestic equities, dealers said. Some importers purchased dollars, which capped the gains for the Indian currency, they said.

"The rupee rose today due to flows (foreign fund inflows), but then some bidding by importers, including oil companies, came in," a dealer with a state-owned bank said.

After rising to a high of 83.8500 a dollar, the rupee closed at 83.8900 a dollar. On Thursday, the Indian unit settled at 83.9525 a dollar. Today, the rupee opened steady after which some banks started selling dollars for foreign fund inflows into domestic equities, which supported the rupee, dealers said.

"There were some inflows related to Adani and Air Asia in the morning," a dealer with a brokerage firm said. "We also saw some good flows (foreign fund inflows), close to a yard ($1 bln) maybe, related to MSCI today."

Several media reports suggested that the Adani family was looking to sell a nearly 3% stake in Ambuja Cements for about $500 mln via a block deal today. Air Asia Bhd secured $443 mln in private financing for refurbishing planes grounded during the pandemic, according to media reports.

Further, dealers said some inflows were also related to the upward revision to HDFC Bank's weightage in MSCI's global standard indices. On Aug 12, MSCI said it would raise the adjustment factor for HDFC Bank in its indices in a staggered manner in two phases.

It said it would raise the adjustment factor for HDFC Bank in its indices to 0.75 from the current 0.5, which will take effect from Sep 2. The remaining float adjustment to 1 from 0.75 will be announced in its November rejig.

Moreover, some exporters also sold the greenback, which supported the rupee, dealers said. They said exporters sold dollars when the rupee touched today's low of 83.9325 a dollar, anticipating a rise in the Indian unit.

If the US Federal Reserve Chair Jerome Powell indicates the possibility of a rate cut in September, the rupee is expected to rise against the dollar in the next week, dealers said. "If Powell indicates a 50 bps rate cut, we may see the rupee rising past 83.75 a dollar in the next week," a dealer with a private bank said. Market participants were cautiously waiting for Powell's speech at the Jackson Hole Economic Symposium in Wyoming later today, for any cues on the quantum of rate cut by the Federal Open Market Committee at its next meeting in September.

Before Powell's speech, the dollar index remained broadly steady. The index, which measures the strength of the greenback against a basket of six major currencies, was 101.41 at 1530 IST, compared with 101.52 on Thursday and 101.14 on Wednesday.

A few dealers speculated mild intervention by the Reserve Bank of India via dollar purchases when the rupee rose to touch today's high of 83.85 a dollar. This limited gains for the Indian unit, they said. 

Noting the RBI's likely presence in the market to prevent the rupee from rising sharply, some importers also purchased the greenback, which weighed on the Indian currency, dealers said.

Further, oil prices rose slightly, which weighed on the greenback, dealers said. Crude prices inched up ahead of Powell's speech on growing expectations of a rate cut by the Fed. At 1530 IST, the October Brent crude contract on the Intercontinental Exchange was at $78.08 per bbl, compared with $77.22 per bbl on Thursday and $76.05 per bbl on Wednesday.

FORWARDS

The premium on the one-year dollar/rupee forward contract ended largely steady, as most market participants refrained from placing large bets ahead of US Federal Reserve Chair Jerome Powell's speech later today, dealers said. Overall volume in the market was also lower-than-usual today, they said.

A rise in US Treasury yields also weighed on forward premiums, dealers said. The yield on the benchmark US Treasury note rose on Thursday, as investors were cautious ahead of Powell's speech. As of today, the odds of a 50-basis-point rate cut by the US Federal Open Market Committee at its meeting in September was 24.5%, with a 75.5% chance of a 25 bps rate cut.

In case Powell's speech indicates a 50-bps rate cut in September, the one-year dollar/rupee forward premium may surge, dealers said.

With increasing chances of a rate cut by the Fed, and a likely delay in cutting rates by the Reserve Bank of India, the interest rate differential between the two countries is expected to widen, thus pushing the forward premiums higher.

At 1530 IST, the premium on the one-year exact-period dollar/rupee contract was 175.05 paise, compared with 176.15 paise on Thursday. On an annualised basis, the premium was 2.09%, against Thursday's close of 2.10%.

OUTLOOK

The market is shut on Saturday. On Monday, the rupee will take cues from the movement in the dollar index. Market participants would be cautiously waiting for Powell's speech later today.

"If there is an indication by Powell of a 50 bps rate cut in September, the dollar index may fall to around 100.75," a dealer with a private bank said.

The Indian unit may also take cues from movement in crude oil prices. Noting relatively lower crude oil prices, oil marketing companies may ramp up their dollar purchases, which could put pressure on the rupee, dealers said. Traders will continue to monitor the evolving situation in West Asia and its impact on crude oil prices.

Dealers expect importers to continue buying dollars at every dip in the dollar/rupee level, which may keep the pressure on the rupee. The RBI is also expected to continue intervening to control the rupee's sharp movement on either side.

During the day, the rupee is seen in a range of 83.75-84.00 a dollar, with strong technical support pegged at 84.00.

India Rupee: Erases some gains on importers' dlr buys; FX inflows aid

MUMBAI – The rupee erased some gains against the dollar as banks purchased the greenback on behalf of importers to take advantage of comparatively lower dollar/rupee levels, dealers said.

"After some good inflows in the morning, we saw 85 level (83.85 a dollar) was capped, as importers were present at such levels," a dealer with a state-owned bank said. "Inflows weakened, and some outflows were also seen, which dragged the rupee slightly down."

A few dealers also speculated about the Reserve Bank of India's intervention via dollar purchases near 83.85-a-dollar to limit a sharp rise in the Indian currency. Today, the Indian unit touched a high of 83.8500 a dollar.

Further, the rupee was broadly supported by foreign fund inflows in domestic equities, dealers said. Some of such inflows were on account of the recent reorganisation by MSCI of its global standard index. As per an announcement earlier this month, MSCI said it will raise the adjustment factor for HDFC Bank in its indices to 0.75 from the current 0.5, which will take effect from Sep 2. The remaining float adjustment to 1 from 0.75 will be announced in its November rejig.

A rise in crude oil prices weighed on the rupee, dealers said. Oil prices rose driven by anticipation of a US interest rate cut, leading to a surge in prices. At 1354 IST, the October Brent crude contract on the Intercontinental Exchange was at $77.60 per bbl, compared with $77.22 per bbl on Thursday and $76.05 per bbl on Wednesday.

The dollar index was steady ahead of the US Federal Reserve chair Jerome Powell's speech at the Jackson Hole Economic Symposium in Wyoming later today. The index, which measures the strength of the greenback against the basket of six major currencies, was 101.40 at 1357 IST, after touching a high of 101.50 earlier today. The index was at 101.52 on Thursday and 101.14 on Wednesday. 

For the rest of the day, the rupee is seen at 83.80-84.00 against the dollar, dealers said. They peg key technical support for the Indian currency at 84.00 a dollar. (Sourabh Kumar)

India Rupee: Premiums steady before Fed Powell's Jackson Hole speech

MUMBAI – The premium on the one-year dollar/rupee forward contract was steady, as most market participants refrained from placing large bets ahead of US Federal Reserve chair Jerome Powell's speech later today, dealers said. This dragged the overall volume in the market lower, they said.

"Levels are broadly similar to yesterday (Thursday), while some mild receiving (selling dollars for forward delivery) was seen," a dealer with a state-owned bank said. "People are waiting for Powell's speech today." Dealers said some banks sold the greenback for forward delivery to take advantage of higher dollar/rupee forward premiums.

A rise in US Treasury yields also weighed on forward premiums, dealers said. The yield on the benchmark US Treasury note rose on Thursday, as investors were cautious ahead of Powell's speech at the Jackson Hole Economic Symposium in Wyoming later today. Market participants will track Powell's speech, hoping that he would indicate the quantum of rate cut in September.

As of today, the odds of a 50-basis-point rate cut by the US Federal Open Market Committee at its meeting in September was 24.5%, with a 75.5% chance of a 25 bps rate cut.

In case Powell's speech indicates a 50-bps rate cut in September, the one-year dollar/rupee forward premium may surge, dealers said. "I think if there is a certainty that a 50-bps rate cut is happening in one go, we may see premiums going above 2.11% or 2.12%," a dealer with another state-owned bank said. "However, major receiving interest at such level may delay or restrict premiums from rising sharply."

At 1305 IST, the premium on the one-year exact-period dollar/rupee contract was 175.77 paise compared with 176.15 paise on Thursday. On an annualised basis, the premium was 2.09%, compared with Thursday's close of 2.10%. (Sourabh Kumar)

India Rupee - Asia FX: Mixed before Fed Powell's Jackson Hole speech

NEW DELHI – Asian currencies moved on a mixed note against the dollar today as traders await US Federal Reserve Chair Jerome Powell's speech at Jackson Hole later today for cues on the extent and timing of interest rate cuts.

Market participants are watchful of Powell's comments for any new cues on the size of the expected rate cut in September. They will also focus on cues on the likelihood of subsequent rate cuts at the meetings thereafter.

Currently, the odds of the US central bank cutting interest rates by 50 basis points at its September policy meeting are 26.5%, while the odds of a 25-bps rate cut are seen as having a 73.5% probability, as per the CME FedWatch Tool. 

Meanwhile, on Thursday, Philadelphia Fed President Patrick Harker said he was on board with a September rate cut as long as the data performs as he expects it to. Boston Fed President Susan Collins also indicated her likely support for a rate cut at the Fed's policy meeting next month, reports said.

The dollar index rebounded slightly from the near-eight-month low of 100.92 it hit on Wednesday, ahead of Powell's speech. This weighed on the Asian units. At 1130 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 101.34 compared with 101.52 on Thursday and 101.14 on Wednesday.

Both the Phillipine peso and Taiwan dollar fell 0.1% against the greenback. The Philippine stock market had surged on Thursday on expectations of further monetary policy easing amid sustained growth prospects. Today, the Philippines' stock market is closed on account of Ninoy Aquino Day.

The South Korean won rose 0.3% against the dollar and the Indonesian rupiah was up 0.4% against the greenback. Indonesia's Parliament shelved planned changes to electoral laws on Thursday after protesters in the capital set fire and faced down tear gas and water cannon over legislation they say would weaken opponents of the outgoing president and his successor, reports said. 

The Malaysian ringgit was steady against the US unit, while the Thai baht was up 0.6% against the dollar. After the Bank of Thailand left interest rates steady this week, the country's caretaker finance minister said on Thursday that the central bank should assist retail borrowers and that retail lending interest rates were too high and need to be addressed. (Pratiksha)

India Rupee: Technical Levels for rupee - Aug 23

MUMBAI – At 0900 IST, the rupee was at 83.9325 a dollar, against 83.9525 from the previous close. At 1121 IST, the rupee was at 83.8600 per dollar. The following are key support and resistance levels for the rupee as provided by leading banks and brokerages:

(Gowri Lakshmi)

India Rupee: Tad up on banks' dlr sales for FX inflows into equities

MUMBAI – The rupee was slightly higher against the dollar as banks sold the greenback for foreign fund inflows into domestic equities, dealers said. However, a rise in crude oil prices may limit gains for the Indian unit, they said. 

"There is some flow in equities, maybe for the stake sale. Crude demand may keep supporting it (dollar/rupee)," a dealer at a state-owned bank said. 

Dealers speculated that the inflow could be on account of demand for shares as the Adani family plans to sell around 3% of its stake in Ambuja Cements to raise up to $500 mln through block deals today, according to media reports. 

However, a rise in crude oil prices limited gains for the Indian unit, dealers said. Oil prices rose over 1% on Thursday, driven by anticipation of a US interest rate cut, leading to a surge in prices. Elevated interest rates raise the expense of borrowing, leading to a potential decline in economic activity and a reduction in demand for oil.

At 0932 IST, the October Brent crude contract on the Intercontinental Exchange was at $77.31 per bbl compared with $77.22 per bbl on Thursday and $76.05 per bbl on Wednesday.

Market participants remained cautious ahead of a speech by US Federal Reserve Chair Jerome Powell later today. Powell is expected to acknowledge the case for a rate cut in September, while also giving some hints on the quantum.

For the rest of the day, the rupee is seen at 83.80-84.00 against the dollar, dealers said. They peg key technical support for the Indian currency at 84.00 a dollar. (Kabir Sharma)

India Rupee : Expected range for rupee - Aug 23

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

(Gowri Lakshmi)

End

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

Edited by Manisha Baxla

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