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Informist, Monday, Nov. 25, 2024

By Gowri Lakshmi

MUMBAI – The rupee ended higher against the dollar with the latest MSCI reorganisation set to come into effect Monday, prompting foreign portfolio investors to sell the greenback to invest in shares of domestic companies, dealers said.

"Today's rise and all movements were purely driven by the MSCI reorganisation, nothing else really influenced today," a dealer at a foreign bank said. 

The rupee settled nearly 0.2% higher against the dollar at 84.2875, after rising to its highest level in over two weeks at 84.2450 a dollar during the day. A fall in the dollar index, after it hit an over-two-year high Friday, supported the rupee, dealers said. A rise in domestic equities also supported the rupee, they said.  

The domestic currency opened higher at 84.3700 a dollar as the US currency fell sharply after a fall in the benchmark US Treasury notes triggered risk-off sentiment. The yield on the 10-year US Treasury note fell to 4.34% Monday from 4.41% Friday as investors mulled over the interest rate path under US President-elect Donald Trump's administration.

At 1530 IST, the dollar index, which measures the strength of the greenback against six major currencies, was 106.92, against its previous close of 107.49 Friday and 107.03 Thursday. Traders currently price in a 52.5% probability of the US Federal Reserve lowering its interest rates by 25 basis points at its December policy meeting, while 47.5% see the Fed maintaining the status quo. 

The rupee was also aided as banks sold the greenback on behalf of overseas investors with the MSCI reorganisation set to come into effect. The rejig is expected to attract around $2.5 billion through passive foreign institutional investor flows, as per market participants. Earlier this month, global index provider MSCI said it added five Indian companies to its global standard indices and included 13 Indian companies in its global small-cap indices, as part of a quarterly review. 

Domestic indices moved higher Monday, which supported the Indian currency, dealers added. Both the benchmark indices ended in the green, with the Sensex ending 1.25% higher and the Nifty 50 up 1.32%.

"The rupee will find comfort in the 84.20 levels for a week or two. The central bank also can heave a sigh of relief as the fear of the rupee inching closer toward 84.50 a dollar is now not as fast as we expected," a dealer at a foreign bank said.

However, the gains in the currency were limited as banks purchased the greenback on behalf of importers, who wanted to take advantage of the lower dollar/rupee levels, dealers said. "This is like a good opportunity for importers to buy, they are of course buying on dips everyday, but today was a good time for them instead of waiting and seeing," a dealer at a foreign bank said. 

FORWARDS

The premium on the one-year dollar/rupee forward contract ended steady Monday as some banks sold dollars for forward delivery, which offset the impact of a fall in the 10-year benchmark US Treasury yield, dealers said.

The yield on the 10-year US Treasury note fell after US President-elect Donald Trump Friday said he would nominate Scott Bessent, a prominent investor, as his Treasury secretary. Banks sold forward dollars due to their view that the forward premium may not rise much because of expectations that the US-India interest rate differential may not widen as much as previously thought.

At 1530 IST, the premium on the one-year exact-period dollar/rupee forward contract was 182.30 paise, against 181.18 paise on Friday. On an annualised basis, the premium was at 2.16%, against Friday's close of 2.15%.

OUTLOOK

On Tuesday, the rupee will take cues from movement in the dollar index and crude oil prices. Dealers expect banks to sell dollars on behalf of foreign portfolio investors looking to invest in the shares of domestic companies, which is expected to keep the rupee up against the greenback. They also expect importers to purchase the dollars, to take advantage of the lower dollar/rupee levels, which may weigh on the Indian unit, they said. 

During the day, the rupee is seen in a range of 84.25-84.35 a dollar, with strong technical resistance pegged at 84.35 a dollar.

India Rupee - World FX: Euro rises 0.4% against dollar on risk-off sentiment

MUMBAI – The euro was up 0.4% against the dollar on Monday as a fall in benchmark US Treasury notes triggered risk-off sentiment. At 1420 IST, the dollar index, which measures the strength of the dollar against six major currencies, was 107.21, against its previous close of 107.49 on Friday and 107.03 on Thursday. The yield on the 10-year US Treasury note fell to 4.34% on Monday from 4.41% on Friday as investors mulled over the future interest rate path under US President-elect Donald Trump's administration.

The pound sterling was up 0.2% against the dollar as market participants assessed the UK Adzuna jobs report published earlier in the day. The report said that seasonal work has boosted the job markets in recent weeks ahead of Christmas. Further, the total number of vacancies fell only slightly in October and at a much lower rate than before, the report said. Investors are now waiting for multiple speeches by Bank of England policymakers, including BoE Deputy Governor Clare Lombardelli and external policy member Swati Dhingra to get more cues on the future monetary policy actions. 

The Japanese yen was up 0.1% against the greenback. Market participants are awaiting economic data due later in the week. Investors are also looking toward Japan's finalised Commercial Board Leading Economic Index, which is expected to influence the Japanese currency and future interest rate decisions by the Bank of Japan. According to preliminary reports, the index rose to 109.4 in September, from 106.9 in August. 

The Australian dollar was up 0.1% against the greenback. The gains in the currency were influenced as the People's Bank of China held the medium-term lending facility steady at 2.0% for one-year loans on Monday. The New Zealand dollar was up 0.2% against the US currency. The Reserve Bank of New Zealand is expected to deliver a super-sized 75 basis points rate cut at its policy meeting on Friday.  (Gowri Lakshmi)

India Rupee: Rises as banks sell dollars for FPI inflows after MSCI rejig

MUMBAI – The rupee hit a high of 84.2575 against the dollar, the highest rise since Nov.7, as banks sold the greenback for foreign portfolio investment into domestic equities after the MSCI rejig, set to become effective Monday, dealers said. Domestic indices also edged higher on Monday on the back of expectations that the Indian stock market will likely attract around $2.5 billion through passive foreign institutional investor flows. This too supported the Indian currency, dealers added.

"There is a high probability the rupee will be able to maintain 84.2500 a dollar for a week or two, depending on the inflows. The inflow (of funds) and the rise (in the rupee) is temporary, and it is highly possible for the currency to go back to 84.40 levels next month," a dealer at a state-owned bank said.

Earlier this month, global index provider MSCI said it added five Indian companies to its global standard indices and also included 13 Indian companies to its global small-cap indices, as part of a quarterly review.

A rise in domestic indices also aided the rupee, dealers said. At 1217 IST, both benchmark indices, the Sensex and the Nifty 50, were up by 1.49% and 1.59%, respectively. A fall in the dollar index also supported the rupee. At 1219 IST, the dollar index, which measures the strength of the greenback against six major currencies, was at 106.92, compared to its previous close of 107.49 on Friday and 107.03 on Thursday.

However, dollar demand from importers slightly weighed on the rupee, dealers said. "General buying of importers is definitely there, they are buying (dollars) on every dip (in the dollar)," a dealer at a public-sector bank said. 

For the rest of the day, the rupee is likely to move in a range of 84.20-84.40 against the dollar. Dealers now see strong immediate technical resistance for the Indian unit at 84.20 a dollar.  (Gowri Lakshmi)

India Rupee: Technical Levels for rupee - Nov 25

MUMBAI – At 0900 IST, the rupee was at 84.3700 a dollar, against its previous close of 84.4450. At 1057 IST, the rupee was at 84.3000 per dollar. The following are the key support and resistance levels for the rupee as provided by leading banks and brokerages:

(Sourabh Kumar and Gowri Lakshmi)

India Rupee: Tad up on FPI inflows; fall of dollar index supports

MUMBAI – The rupee was slightly up against the dollar Monday as banks sold the greenback likely on behalf of foreign portfolio investors, dealers said. Fall of the dollar index, after soaring to an over two-year high on Friday, also supported the rupee, they said.

"Both the equity and bond index (gilts) have opened higher, that's why the rupee was up. We expect more inflows into the stock market during the day, which will aid the rupee. The rupee could rise as high as 84.35 a dollar and will be in the range of 84.3500-84.4000 a dollar," a dealer at a state-owned bank said.

At 0921 IST, both the benchmark shares indices, the Sensex and Nifty 50, were up at 1.42% and 1.46%, respectively. "The panic about the Adani issue has come down a bit, that also contributed to the equities opening high. It will take a few more days for the market to settle," a dealer at another public-sector bank said. The Indian stock market saw panic selling last week after Gautam Adani, chairperson of the Adani Group companies, was indicted by a New York federal court on charges of bribery and fraud.

In the US, the yield on the 10-year Treasury note fell 2 basis points to 4.41% as investors mulled over the future interest rate path under US President-elect Donald Trump's administration. The fall in US Treasury yields shifted investor focus to the Indian gilts market, which supported the rupee, dealers said.

Traders have priced in a 55.9% probability of the US Federal Reserve lowering its interest rates by 25 bps at its December policy meeting, while 44.1% see the central bank maintaining status quo. 

At 0929 IST, the dollar index, which measures the strength of the dollar against six major currencies, was 106.91, against its close of 107.49 on Friday and 107.03 on Thursday. The index had surged to an over two-year high of 108.07 on Friday.

However, the rupee is expected to be weighed down by dollar demand from importers, dealers said. "The rupee has opened higher, importers are likely to buy dollars aggressively to take advantage of the lower dollar/rupee levels," a dealer at a state-owned bank said. Dealers expect the Reserve Bank of India to step in through dollar sales to prevent the rupee from falling sharply and to curb any sudden volatility.

During the day, the rupee is likely to move in a range of 84.35-84.45 against the dollar. Dealers see strong immediate technical support for the Indian unit at 84.45 a dollar.  (Gowri Lakshmi)

India Rupee - Asia FX: Most units up as dollar index retreats from 2-yr high

MUMBAI – Most Asian currencies were up in early trade Monday, as the dollar index retreated from an over two-year high of 108.07 hit on Friday. The South Korean won gained the most, rising by over 0.6% against the US dollar. The South Korea Composite Stock Price Index was up nearly 1.5% in early trade, which supported the won.

The Taiwan dollar rose 0.2% against the US currency, supported by a 0.5% rise in the Taiwan Stock Exchange Capitalization Weighted Stock Index. The Malaysian ringgit was also up 0.2% against the US unit. Bursa Malaysia was up over 1%, which supported its currency. The Indonesian rupiah rose against the US dollar.

On Friday, the dollar index had surged after the US Composite PMI Output Index rose to 55.3 in November, the highest since April 2022 and up from 54.1 in October. On the other hand, the Eurozone's economy was not in the best of health. HCOB's preliminary composite Eurozone Purchasing Managers' Index fell to a 10-month low of 48.1 in November. A level below 50 indicates contraction in the sector, while a figure above it shows expansion. Consequently, the euro fell sharply, which supported the US dollar. The euro constitutes 57.6% of the dollar index.  (Sourabh Kumar)

India Rupee: Expected range for rupee - Nov 25

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:

(Sourabh Kumar)

End

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

Edited by Rajeev Pai

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