Informist, Tuesday, Aug 30, 2022

By Pratiksha

NEW DELHI – The rupee settled at its highest closing level against the greenback in two weeks due to continuous dollar sales by exporters and foreign portfolio investors, dealers said.   

The Indian rupee settled 0.6% higher at 79.4500 a dollar. The rupee posted a gain of 51 paise against the dollar today, highest in a day since August 2021. 

The Indian currency opened higher at 79.9150 a dollar because the dollar index retreated from a 20-year high it hit on Monday, dealers said. 

The dollar index, which measures the strength in the greenback against a basket of six major currencies, eased as the euro gained on expectation that the European Central Bank will tighten monetary policy more aggressively than initially thought.

European Central Bank board member Isabel Schnabel warned over the weekend that central banks must act forcefully to combat inflation, even if that dragged economies into recession.

The dollar index rose to 109.48 on Monday, a level not seen since September 2002, as US Federal Reserve Chair Jerome Powell on Friday indicated more rate hikes in the central bank's efforts to combat the highest inflation in four decades.

At 1630 IST, the dollar index was at 108.48 compared with 108.84 on Monday. It was at 108.80 on Friday.

Just two hours into trade, the rupee rose further to 79.75 a dollar as foreign banks, including a UK-based bank, persistently sold dollars on behalf of foreign portfolio investors, dealers said.

Dealers said a surge in domestic equity indices prompted banks to sell dollars on behalf of foreign portfolio investors. The Nifty 50 and the Sensex closed 2.6% and 2.7% higher, respectively.

Dealers said a part of these inflows were due to improvement in investor sentiment after recent reports said JPMorgan was seeking investors' views on including India into its Global Bond Index-Emerging Markets.

Indian bonds may constitute up to 10% of the index, which is tracked by $240 bln of assets under management, the report said.

Inclusion in global bond indices is expected to drive in up to $40 bln in inflows over a multi-year timeframe, according to HSBC. This is expected to provide boost to the rupee in the long-term.

Moreover, banks sold dollars on behalf of exporters, which also provided support to the Indian unit, dealers said. According to dealers, among the exporters, information technology companies sold dollars aggressively today.

"Some cheer in rupee came, and it rose more than half a percent on account of possible bulk export proceeds converted into rupee," a dealer with brokerage firm said.

Dealers said Reserve Bank of India's dollar sale interventions in the past few trading sessions led exporters to believe that the central bank may not allow the domestic currency to remain below the psychologically crucial level of 80-per-dollar. 

As exporters stepped up their dollar sales, stop-losses were triggered on long dollar bets around the 79.70-a-dollar level, and the domestic currency ascended to the day's high of 79.4400 a dollar, dealers said. 

"Looks like exporters were selling (dollars) out of panic," a dealer with a private bank said. "After yesterday's aggressive intervention by the RBI around the 80 mark it was somewhat expected."

FORWARDS

After a sharp fall on Monday, premiums on one-year dollar/rupee forwards ended largely steady today due to the absence of fresh triggers, dealers said.

The premium on the one-year, exact-period dollar/rupee forward contract was 237.03 paise as against 236.03 paise at close on Monday. On an annualised basis, the premium was 2.96% as against 2.95% at the previous close.

The premiums fell by 8-10 bps across tenures on Monday as the US Federal Reserve Chair Jerome Powell on Friday indicated more rate hikes in the central bank's efforts to control the highest inflation in four decades. 

OUTLOOK

Domestic financial markets will be shut on Wednesday on account of Ganesh Chaturthi.

On Thursday, the rupee will take cues from overnight movement in the dollar index and Brent crude oil prices, dealers said.

"The market is now looking at the ECB (European Central Bank) policy outcome next week," a dealer with a state-owned bank said. "The US employment report on Friday is also crucial for further direction of the rupee."

Dealers expect RBI to continue to intervene through dollar sales to protect the rupee from depreciating sharply against the greenback.

Dealers see strong key technical resistance for the rupee at 79.30 a dollar and technical support at 80.20 a dollar.

During the day, the rupee is seen within a range of 79.30-79.80 a dollar.

India Rupee: Premiums steady amid lack of fresh triggers

MUMBAI – After a sharp fall on Monday, premiums on one-year dollar/rupee forwards were largely steady today due to the absence of fresh triggers, dealers said.

The premium on the one-year, exact-period dollar/rupee forward contract was at 237.03 paise as against 236.03 paise at close on Monday. On an annualised basis, the premium was at 2.96% as against 2.95% at the previous close.

"Downside move is seen limited for forward premiums from current levels," a dealer at a state-owned bank said. "These are good levels for importers to cover forward dollars."

The premiums fell by 8-10 bps across tenures on Monday as the US Federal Reserve Chair Jerome Powell on Friday indicated more rate hikes in the central bank's efforts to control the highest inflation in four decades. (Richard Fargose)

India Rupee:Surges as stop-losses hit after FPIs, exporters sell dlrs

NEW DELHI – The rupee surged against the greenback after exporters and foreign banks persistently sold dollars, which led to stop-losses being triggered near the 79.70-a-dollar level, dealers said.

A sharp rise in domestic equity indices prompted banks to sell dollars on behalf of foreign portfolio investors, dealers said. At 1330 IST, the Nifty 50 and the Sensex were 2.0% higher, each.

Moreover, banks continuously sold dollars on behalf of exporters, which lifted the Indian unit, dealers said. 

According to dealers, among the exporters, information technology companies sold dollars aggressively today.

Dealers said the Reserve Bank of India's dollar sale interventions in the past few trading sessions led exporters to believe that the central bank may not allow the domestic currency to remain below the psychologically-crucial level of 80-per-dollar. 

For the rest of the day, the Indian unit is seen moving in the range of 79.3000-79.8000 a dollar.  (Pratiksha)

India Rupee: Rises more as foreign bks sell dlrs for FPIs, exporters

NEW DELHI – The rupee rose further against the greenback as foreign banks persistently sold dollars on behalf of foreign portfolio investors, dealers said.

Dealers said a surge in domestic equity indices prompted banks to sell dollars on behalf of foreign portfolio investors. At 1144 IST, the Nifty 50 and the Sensex were 1.4% higher, each.

Moreover, banks sold dollars on behalf of exporters, which also provided support to the Indian unit, dealers said. 

Dealers said the Reserve Bank of India's dollar sale interventions in the past few trading sessions led exporters to believe that the central bank may not allow the domestic currency to remain below the psychologically-crucial level of 80-per-dollar. 

Dealers have pegged immediate technical resistance for the rupee at 79.70 a dollar and long term resistance at 79.50 a dollar. 

For the rest of the day, the Indian unit is seen moving in the range of 79.6000-80.0000 a dollar. (Pratiksha)

India Rupee - Asia FX: Mixed; gains in local equities support

MUMBAI – Asian currencies traded mixed today as traders remained on the sidelines amid persisting concerns around the US Federal Reserve's aggressive rate hike plans.

However, gains in most Asian equity markets supported local currencies.

Asian currencies also remained supported as the dollar index retreated from a 20-year high it hit on Monday.

The dollar index, which measures the strength in the greenback against a basket of six major currencies, eased as the euro gained on expectation that the European Central Bank will tighten monetary policy more aggressively than expected. (Richard Fargose)

India Rupee: Rises as dlr index eases from 20-yr high, local shrs up

NEW DELHI – The rupee rose against the greenback today because the dollar index retreated from a 20-year high it hit on Monday, dealers said. 

The dollar index, which measures the strength in the greenback against a basket of six major currencies, eased as the euro gained on expectation that the European Central Bank will tighten monetary policy more aggressively than initially thought.

European Central Bank board member Isabel Schnabel warned over the weekend that central banks must act forcefully to combat inflation, even if that dragged economies into recession.

At 0926 IST, the dollar index was at 108.77 compared with 108.84 on Monday. It was at 108.80 on Friday.

A rise in domestic equity indices also supported sentiment for the Indian unit, dealers said. At 0926 IST, the Nifty 50 and the Sensex were 0.8% higher, each.

"I think the rupee will remain in a narrow range of 79.75-80.00 (a dollar) today," a dealer with a state-owned bank said. "Importers will wait for a move above 79.50 to buy (dollars)."

Dealers have pegged the immediate technical resistance for the rupee at 79.70 a dollar.

For the rest of the day, the Indian unit is seen moving in the range of 79.7000-80.1500 a dollar.  (Pratiksha)

India Rupee: Expected range for rupee - Aug 30

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

(Pratiksha)

End

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

Edited by Deepshikha Bhardwaj

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