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Informist, Tuesday, Nov. 26, 2024

By Gowri Lakshmi

MUMBAI – The rupee ended slightly lower against the dollar Tuesday as banks purchased dollars for foreign portfolio investor outflows from the Indian stock market, dealers said. Some banks also purchased the greenback, likely on behalf of the Reserve Bank of India, which weighed on the rupee, they said. 

"The RBI was seen buying today (Tuesday), that's what led to the sudden pull down in the rupee. They purchased around the 84.2700-84.2800 levels," a dealer at a foreign bank said. 

A fall in crude oil prices prompted oil marketing companies to purchase the greenback, which put the local unit under downward pressure. A fall in other Asian currencies also impacted the rupee adversely. Most Asian currencies fell between 0.1-0.3%, with the Indonesian rupiah being the worst performer. 

After rising to 84.2200 a dollar during the day, the highest level since Nov.6, the rupee ended at 84.3275 a dollar Tuesday, against 84.2875 a dollar Monday. The rupee moved in a "wide" range of 13 paise during the day.

The rupee opened steady against the dollar at 84.2700 a dollar, as the local unit was aided by some inflows after the MSCI rejig, dealers said. "We have got as much as $2 billion inflows related to MSCI so far, the expected estimate was $2.5 billion," a dealer at a state-owned bank said. Global index provider MSCI said it added five Indian companies to its global standard indices and 13 Indian companies to its global small-cap indices. The changes in the indices came into effect from Tuesday.

However, the rupee came under downward pressure a few hours after opening in the domestic spot market, as some banks purchased the greenback, likely for investors who wanted to "book profits from the last two days," from the Indian equities market, dealers said. Banks also purchased the greenback on behalf of oil marketing companies after crude prices fell almost 2% Tuesday, which weighed on the rupee.

Oil prices fell after reports suggested a possible peace deal in the ongoing West Asian conflict. Reuters reported that Israel and Lebanon agreed to terms of a deal which could potentially end the Israel-Hezbollah conflict. At 1530 IST, the January Brent Crude contract on the Intercontinental Exchange was $73.71 per barrel, down from $75.38 a barrel on Monday. 

Gains in the domestic currency from Monday were also capped as the RBI purchased the greenback to shore up its foreign exchange reserves. In recent weeks, the reserves have fallen consistently due to RBI's likely intervention in the foreign exchange market through dollar sales to prevent the rupee from falling sharply. India's foreign exchange reserves declined by $17.76 billion during the week ended Nov. 15, the biggest weekly fall on record. The reserves were at a four-month low of $657.89 billion in the week ended Nov. 15.

The rupee was also weighed by a rise in the dollar index, as the index pared losses from Monday after President-elect Donald Trump vowed to impose 25% import tariffs on all imports to the US from Mexico and Canada, and an additional 10% tariff on all imports from China. Following Trump's comments, the dollar index, which measures the strength of the dollar against six major currencies, rose to a high of 107.50, compared with 106.83 on Monday and 107.49 on Friday.

Market participants are now waiting for key economic data points from the US, including the retail sales data and consumer confidence index due later in the day. The minutes of the November Federal Open Marketing Committee Meeting are due Wednesday. 

Traders are currently priced in a 59.6% probability of the US Fed lowering its interest rates by 25 basis points in the December policy meeting and a 40.4% chance of the central bank maintaining a status quo, according to the CME FedWatch tool.

FORWARDS

Premium on the one-year dollar/rupee forward contract rose Tuesday, tracking a fall in the benchmark 10-year US Treasury yield, dealers said. The rise in premiums was, however, capped as the interest rate differential between the US and India is seen widening less than earlier expected, dealers said.

The yield on the 10-year US Treasury note fell sharply, by 14 basis points Monday. The fall came as investors weighed President-elect Donald Trump's pick of Scott Bessent as treasury secretary. Market participants now await the release of economic data from the US, including the Johnson Redbook retail sales index for last week, and Jul-Sept housing price index, both due after Indian market hours.

At 1530 IST, the premium on the one-year exact-period dollar/rupee forward contract was 185.81 paise, against 182.31 paise on Monday. On an annualised basis, the premium was at 2.19%, against Monday's close of 2.16%.

OUTLOOK

On Wednesday, the rupee will take cues from movement in the dollar index and crude oil prices. Dealers expect banks to purchase dollars on behalf of foreign portfolio investors looking to withdraw funds from domestic equity markets, which is expected to weigh on the rupee.

"We can expect the profit booking to continue for some days, possibly, but the rupee is still expected to be range bound within 84.2500-84.3500 a dollar," a dealer at a public sector bank said.

During the day, the rupee is seen in a range of 84.20-84.40 a dollar, with strong technical support pegged at 84.35 a dollar.

India Rupee - World FX: Yen rises as data supports Bank of Japan rate hike

MUMBAI – The Japanese yen rose 0.2% against the dollar after data on Tuesday showed that the service-sector inflation was steady near 3% in October, further supporting the expectations of an interest rate hike by the Bank of Japan. The services producer price index rose 2.9% in October, climbing from a 2.8% gain in September, the data showed. The data will be amongst key factors that the central bank will scrutinise for its monetary policy decisions in December. 

The Australian dollar was down 0.4% against the greenback after President-elect Donald Trump vowed to impose a 25% tariff on all products imported into the US from Mexico and Canada and an additional 10% on all Chinese imports. Any change in the Chinese economy will directly influence the currencies of Australia and New Zealand due to their close bilateral trade relations. Following the fall in the Australian currency, the New Zealand dollar was down 0.1%.

The Canadian dollar fell to its lowest levels since April 2020 against the dollar, after Trump's comment about imposing a 25% import tariff on Canada. A fall in crude oil prices also impacted the commodity-linked currency. At 1500 IST, the January Brent Crude contract on the Intercontinental Exchange was $73.55 per barrel, against $75.38 per barrel on Monday. 

The pound sterling was down 0.1% against the dollar after the dollar index rose, paring losses from Monday following Trump's comments. At 1503 IST, the dollar index, which measures the strength of the greenback against six major currencies, was 106.90, compared to its previous close of 106.83, and 107.49 on Friday. The euro and Swiss franc were flat against the dollar. (Gowri Lakshmi)

India Rupee: Steady; dlr sales for FPI inflows in shares offset strong dlr

MUMBAI – The rupee was steady against the dollar as the impact of a strong dollar was offset by banks' sales of the US unit for foreign fund inflows into Indian equities, dealers said. "The dollar is having some effect, but FII (foreign institutional investor) flows in equities is capping the losses for rupee," a dealer at a brokerage said. "The yuan weakness is also having an impact today."

The dollar rose after President-elect Donald Trump announced he would impose tariffs on all products imported from Mexico and Canada, dealers said. Trump pledged a 25% tariff on all imported products from Canada and Mexico. In a social media post, he pledged to impose an additional 10% tariff on imports from China. He said the tariffs would combat illegal immigration and the illicit drug trade. Trump also accused China of not doing enough to stop illicit drugs crossing the Mexican border into the US.

Due to the MSCI reorganisation, market participants had expected around $2.5 billion worth of foreign fund inflows into Indian equities, which is expected to support the rupee, dealers said. In the latest round of reorganisation, MSCI Global Standard Indexes added five new companies. The move raised India's weightage in the MSCI emerging markets index to 19.8% from 19.3%. Consequently, HDFC Bank's share in the index also rose.

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.  (Kabir Sharma)

India Rupee: Technical Levels for rupee - Nov 26

MUMBAI – At 0900 IST, the rupee was at 84.2700 a dollar, against its previous close of 84.2875. At 1101 IST, the rupee was at 84.2675 per dollar. The following are the key support and resistance levels for the rupee as provided by leading banks and brokerages:

(Sourabh Kumar)

India Rupee: Slightly up as banks sell dollars for MSCI rejig-related FPI inflows

MUMBAI – The rupee was slightly higher against the dollar as some banks sold dollars on behalf of overseas investors for investment in the domestic equity market, dealers said.

"There are MSCI-related flows today (Tuesday) as well, after around $2 billion came yesterday (Monday)," a dealer with a state-owned bank said. Due to the MSCI reorganisation, market participants had expected around $2.5 billion worth of foreign fund inflows.

In the latest round of reorganisation, MSCI Global Standard Indexes added five new companies. The move raised India's weightage in the MSCI emerging markets index to 19.8% from 19.3%. Consequently, HDFC Bank's share in the index also increased.

The Indian rupee rose soon after opening at 84.2700 a dollar due to such foreign fund inflows. A fall in crude oil prices also supported the Indian currency, dealers said. A fall in oil prices reduces the import bill of the country, thereby benefitting the domestic currency. Oil futures fell after reports said Israel and Lebanon may reach a ceasefire agreement. At 0921 IST, the January Brent crude contract on the Intercontinental Exchange was at $73.21 per barrel, against $73.01 a barrel on Monday and $75.17 a barrel on Friday.

Further, the dollar index rebounded, which weighed on the rupee, dealers said. The dollar index rose after President-elect Donald Trump announced he would impose tariffs on all products imported from Mexico and Canada, dealers said. Trump pledged a 25% tariff on all imported products from Canada and Mexico. In a social media post, Trump pledged to impose an additional 10% tariff on imports from China. He said the tariffs would combat illegal immigration and the trade of illicit drugs. Trump also accused China of not doing enough to stop illicit drugs crossing the Mexican border into the US.

In the domestic market, dealers said a sharp rise in the Indian rupee would be capped, as they see an increasing likelihood of the Reserve Bank of India purchasing the greenback to shore up its foreign exchange reserves. In recent weeks, the reserves have fallen consistently due to RBI's likely intervention in the foreign exchange market through dollar sales to prevent the rupee from falling sharply. India's foreign exchange reserves had posted their biggest weekly fall on record to an over four-month low of $657.89 billion in the week ended Nov. 15.

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.  (Sourabh Kumar)

India Rupee - Asia FX: Most down as dollar index rises on Trump's tariff pledge

MUMBAI – Most Asian currencies were down Tuesday as the dollar index rebounded after US President-elect Donald Trump said he would impose a 25% tariff on all products imported from Mexico and Canada. In a social media post, Trump pledged to impose an additional 10% tariff on imports from China. He said the tariffs would combat illegal immigration and the trade of illicit drugs. Trump accused China of not doing enough to stop illicit drugs crossing the Mexican border into the US.

The dollar index, which measures the strength of the greenback against a basket of six major currencies, was 107.22 at 0839 IST against 106.83 on Monday and 107.49 on Friday.

The Indonesian rupiah and Malaysian ringgit were both down 0.3% against the US currency. The rupiah was also weighed down by a fall in domestic equities. The Jakarta Stock Exchange Composite Index was down 0.2%. The Thai baht was also down 0.3% against the US currency.

The Taiwan dollar was steady while the South Korean won was up 0.1% against the dollar ahead of Bank of Korea's rate decision on Thursday. The South Korean central bank is expected to keep the benchmark rate steady at 3.25%, according to a poll by Reuters.  (Sourabh Kumar)

India Rupee: Expected range for rupee - Nov 26

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

(Sourabh Kumar and Pratiksha)

End

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

Edited by Saji George Titus

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