Informist, Friday, Feb 23, 2024

By Vaishali Tyagi and Sourabh Kumar

MUMBAI – The rupee ended lower against the dollar today as a few banks bought the greenback on behalf of importers and oil marketing companies, dealers said. The Indian currency was also weighed down by rise in crude oil prices, which increases India's import bill, dealers said.

Buying by importers due to the lucrative levels lifted the dollar/rupee. Importers don't expect dollar to go beyond a certain level, so these are good levels to buy, a dealer at a state-owned bank said. Some oil buyers were also there in the market, the dealer said.

The rupee closed at 82.9375 a dollar against Thursday's close of 82.8400 a dollar. The Indian unit moved in a range of 12 paise during the day.

The rupee had opened steady against the dollar as banks sold the greenback for investment by foreign funds into the Indian debt market, which offset the impact of a rise in crude oil prices, dealers said.

The rupee was almost steady during the first hour of the session, but started depreciating as demand for the greenback increased. General importers, along with a few oil marketing companies, started buying dollars, which weighed on the rupee. The rupee then stabilised and was trading at 82.88-82.89 a dollar.

Dealers did not expect the rupee to stay above 82.90 a dollar, and demand from importers was expected to come into the market. Towards the end of the day, the rupee weakened, as was the case throughout this week, except Thursday.

While inflows and a weak dollar index supported the rupee, rise in crude oil prices weighed on it, they said. Crude oil futures rose amid simmering tensions in the Red Sea after the Houthis stepped up attacks near Yemen.

The Houthis will increase their attacks on ships in the Red Sea and have introduced "submarine weapons," the group's leader said on Thursday, as the militants kept up attacks on ships to show solidarity towards Palestinians in the Gaza war.

However, a more-than-expected increase in US inventories capped the rise in crude oil prices. Crude inventories in the US rose by 3.5 mln barrels to 442.9 mln bbl in the week ended Feb 16, the Energy Information Administration said. A poll by Reuters had pegged the rise at 3.9 mln bbl. At 1623 IST, the April contract of Brent crude oil on the Intercontinental Exchange was at $83.83 a bbl, compared with $83.67 a bbl on Thursday and $83.03 a bbl on Wednesday.

The dollar index remained weak today as investors are waiting for US economic data due next week. On Thursday, US Federal Reserve Vice Chair Philip Jefferson said that he would consider a broad set of economic data to get convinced of the time for cutting rates, rather than focusing on a single indicator. "I am looking at the totality of the data in the economy," he said.

Fed Governor Christopher Waller said policymakers should delay interest rate cuts by at least another couple of months to see if a recent uptick in inflation signals stalling progress toward price stability or is just a bump in the road. "I am going to need to see at least another couple more months of inflation data before I can judge whether January was a speed bump or a pothole."

At 1258 IST, the dollar index, which measures the strength in the greenback against a basket of six major currencies, was at 103.89 compared with 103.93 on Thursday. The dollar index had touched a three-week low of 103.43 on Thursday. It was at 103.97 on Wednesday. Market participants now await inflation data from the US next week, dealers said.

FORWARDS

Premiums on one-year dollar/rupee forward contracts fell to their lowest level in almost a month today due to rise in US Treasury yields, dealers said. Some dealers said there was some receiving interest building ahead of the maturity of the Reserve Bank of India's $5 bln sell/buy swap on Mar 11.

The premium on the one-year, exact-period dollar/rupee forward contract was 142.56 paise, down from 144.08 paise at Thursday's close. On an annualised basis, the premium was 1.71%, down from 1.73% at the previous day's close.

Market participants see technical resistance for the one-year dollar/rupee forward premium at 1.70%.

OUTLOOK

On Monday, the rupee will take cues from movement of the dollar index and crude oil prices, dealers said. During the day, the rupee is seen in a range of 82.80-83.30 a dollar, with key technical resistance pegged at 82.80 a dollar.

 India Rupee - World FX:Yen dn as Japan may persist with negative rate

MUMBAI – The Japanese yen was 0.1% down against the dollar as expectations of investors that the Bank of Japan will end negative interest rates soon dimmed after data released last week showed that Japan's economy unexpectedly fell into recession.

The dollar index recovered from a three-week low after data showed jobless claims in the US were lower than expected. Initial claims for state unemployment benefits dropped 12,000 to a seasonally adjusted 201,000 for the week ended Saturday, the Labor Department said on Thursday. Economists polled by Reuters had forecast 218,000 claims for the latest week. Consequently, Fed fund futures traders are now pricing in a 49.7% chance of a rate cut by the US Federal Reserve in June, according to the CME Fed Watch Tool. 

Federal Reserve Vice Chair Philip Jefferson said on Thursday that he would consider multiple economic data to decide when it is time to cut rates, but gave no hints on when that first rate-cut might come. "I am looking at the totality of the data in the economy," he said. Further, Fed Governor Christopher Waller said on the same day that US Fed policymakers should delay interest rate cuts by another couple of months to better gauge what an uptick in inflation signals exactly.

At 1537 IST, the dollar index, which measures the strength in the greenback against a basket of six major currencies, was at 104.02 compared with 103.93 on Thursday. The dollar index touched a three-week low of 103.43 on Thursday. It was at 103.97 on Wednesday.

The euro and Australian dollar were largely flat against the US unit while the pound sterling rose 0.1% against the US unit as investors await fresh guidance on Bank of England interest rates. The Canadian dollar and Swiss franc fell 0.1% against the dollar. (Vaishali Tyagi) 

India Rupee: Premiums at near 1-mo low as US yields rise; volume dull

MUMBAI – Premiums on one-year dollar/rupee forward contracts fell to their lowest level in almost a month today due to a rise in US Treasury yields, dealers said. 

US Treasury yields ended a tad higher on Thursday, as economic data from the US indicated that the world's largest economy remained solid, supporting expectations that the Federal Reserve will postpone its interest rate reductions until June or later in the year. Premiums on forwards of a currency pair are reflective of the interest rate differential between the two countries.

"The forwards are a bit down, but broadly it is steady," a dealer with a state-owned bank said. "Nowadays, this logic of traders hedging in the forwards market simultaneously does not apply. They are not coming because they see very low profit here (in forwards market)." Volumes in the market are low and banks are refraining from placing bets as prices offered are not lucrative, dealers said. 

In the US, the labour market remained resilient as data showed unemployment claims were less than expected. Initial claims for state unemployment benefits dropped to a seasonally adjusted 201,000 for the week ended Saturday against economists' forecast of 218,000 in a Reuters poll.

Federal Reserve Vice Chair Philip Jefferson said on Thursday that he would consider multiple economic data to decide when it is time to cut rates, but gave no hints on when that first rate-cut might come. "I am looking at the totality of the data in the economy," he said. Further, Fed Governor Christopher Waller said on the same day that US Fed policymakers should delay interest rate cuts by another couple of months to better gauge what an uptick in inflation signals exactly.

Meanwhile, some dealers said there is some receiving interest building ahead of the maturity of the Reserve Bank of India's $5 bln sell/buy swap on Mar 11.   

At 1428 IST, the premium on the one-year, exact-period dollar/rupee forward contract was 143.56 paise, against 144.08 paise at Thursday's close. On an annualised basis, the premium was 1.72% against the previous day's close of 1.73%. Earlier today, premiums fell to almost a one-month low of 1.70%.  (Sourabh Kumar)

India Rupee:Tad dn on bks' dlr buys for importers, rise in oil prices

MUMBAI – The rupee was slightly down against the dollar as a few banks bought the greenback on behalf of importers, dealers said. The rise in crude oil prices also weighed on the Indian unit, they said.

"We have been seeing that there is some buying since morning, and it is bringing the rupee slowly down," a dealer with a private bank said. "I think now we have to see if it (rupee) goes back to 83.05-83.06 a dollar, as that is a great level to sell, but the question is, will it today?"

The rupee has historically not been able to sustain the sub-90 levels, so it might go down from here, dealers said. After opening at 82.8600 a dollar, the rupee had been coming down since earlier today. The Indian unit also came under pressure from high crude oil prices.

Crude oil futures rose amid simmering tensions in the Red Sea after the Houthis stepped up attacks near Yemen. Houthis will increase their attacks on ships in the Red Sea, after having introduced "submarine weapons," the group's leader said on Thursday, as it kept up its attacks on ships to show solidarity towards Palestinians in the Gaza war. However, a more-than-expected increase in US crude inventories capped the gains for the commodity, dealers said. At 1252 IST, the April contract of Brent crude oil on the Intercontinental Exchange was at $83.23 a barrel, compared with $83.67 a bbl on Thursday, and $83.03 a bbl on Wednesday.

While crude oil prices and banks' dollar buys for importers weighed on the rupee, a slight ease in the dollar index provided some respite to the Indian currency. The dollar index has been low as investors await economic data from the US due to be released next week.

US Federal Reserve Vice Chair Philip Jefferson said on Thursday that he would consider a broad set of economic data to get convinced of the time for cutting rates, rather than focusing on a single indicator. At 1258 IST, the dollar index, which measures the strength in the greenback against a basket of six major currencies, was at 103.89 compared with 103.93 on Thursday. The dollar index touched a three-week low of 103.43 on Thursday. It was at 103.97 on Wednesday.

Along with the dollar index, a slight rise in domestic equities also supported the rupee. At 1300 IST, both the Sensex and Nifty 50 were up 0.2%. 

For the rest of the day, the rupee is seen in the range of 82.80-83.10 against the dollar, dealers said. They pegged the key technical resistance for the Indian currency at 82.80 a dollar.  (Sourabh Kumar)

India Rupee: Steady as FX inflows offset rise in crude oil prices

MUMBAI – The rupee was steady against the dollar as banks sold the greenback for foreign fund inflows in the Indian debt market, which offset the impact of a rise in crude oil prices, dealers said. A rise in crude prices increases India's import bill, which in turn weighs on the currency.

"Today also, banks are selling dollars for fund inflows only in bonds and fund-raising by companies, but I do not see the dollar/rupee pair going below 82.83 a dollar level," a dealer at a state-owned bank said.  

On Thursday, crude oil futures rose as tensions continued in the Red Sea after the Houthis stepped up attacks near Yemen. Yemen's Houthis will increase their attacks on ships in the Red Sea and other waters and have introduced "submarine weapons," the group's leader said on Thursday, as it keeps up attacks on shipping to show support for Palestinians in the Gaza war.

"Operations in the Red and Arabian Seas, Bab al-Mandab Strait, and the Gulf of Aden are continuing, escalating, and effective," Abdul Malik al-Houthi said in a televised speech, according to Reuters. At 0947 IST, the April contract of Brent crude oil on the Intercontinental Exchange was at $83.23 a barrel, compared with $83.67 a bbl on Thursday, and $83.03 a bbl on Wednesday.

However, a more than expected increase in US crude inventories limited gains for the commodity, dealers said. Crude inventories rose by 3.5 mln bbl to 442.9 mln bbl in the week ending Feb 16, the Energy Information Administration said, compared with analysts' expectations for a 3.9 mln bbl rise.

A recovery in the dollar index from a three-week low also weighed on the Indian unit. The dollar index recovered today after data showed jobless claims in the US were lower than expected. Initial claims for state unemployment benefits dropped 12,000 to a seasonally adjusted 201,000 for the week ended Saturday, the Labor Department said on Thursday. Economists polled by Reuters had forecast 218,000 claims for the latest week. Consequently, Fed fund futures traders are now pricing in a 49.7% chance of a rate cut by the US Federal Reserve in June, according to the CME Fed Watch Tool. 

At 0946 IST, the dollar index, which measures the strength in the greenback against a basket of six major currencies, was at 103.90 compared with 103.93 on Thursday. The dollar index touched a three-week low of 103.43 on Thursday. It was at 103.97 on Wednesday.

A slight rise in domestic equities also supported the Indian unit. At 0927 IST both the Sensex and Nifty 50 were up 0.2%.  

Market participants also assessed data from China which showed that new home prices in 70 of the country's major cities fell at a faster pace in January from a year ago. Average new home prices in January fell 1.24% from a year earlier, accelerating from December's 0.89% decline, according to calculations by The Wall Street Journal, based on data released by the National Statistics Bureau today.

For the rest of the day, the rupee is seen in the range of 82.80-83.10 against the dollar, dealers said. They pegged the key technical resistance for the Indian currency at 82.80 a dollar.  (Vaishali Tyagi) 

India Rupee - Asia FX: Dn on weak China home price data, dlr recovery

MUMBAI – Most Asian currencies weakened against the dollar as data showed that new home prices in 70 of China's major cities fell at a faster pace in January from a year ago. Average new home prices in January fell 1.24% from a year earlier, accelerating from December's 0.89% decline, according to calculations by The Wall Street Journal based on data released by the National Statistics Bureau today.

A recovery in the dollar index from a three-week low also weighed on Asian currencies. The dollar index recovered today after data showed jobless claims in the US were lower than expected. Initial claims for state unemployment benefits dropped 12,000 to a seasonally adjusted 201,000 for the week ended Saturday, the Labor Department said on Thursday. Economists polled by Reuters had forecast 218,000 claims for the latest week. Consequently, Fed fund futures traders are now pricing in a 49.7% chance of a rate cut by the US Federal Reserve in June, according to the CME Fed Watch Tool. 

At 0831 IST, the dollar index, which measures the strength in the greenback against a basket of six major currencies, was at 103.90 compared with 103.93 on Thursday. The dollar index touched a three-week low of 103.43 on Thursday. It was at 103.97 on Wednesday.  

The Philippines peso weakened 0.2% against the dollar as latest data from its central bank, Bangko Sentral ng Pilipinas, showed that the January balance of payment recorded a deficit of $740 mln, a reversal of the $3.08 bln surplus a year ago. According to the central bank, the balance of payment deficit is a reflection of outflows arising mainly from the government's payments for its foreign currency debt obligations.

The Taiwan dollar fell 0.2% against the dollar. The South Korean won, Malaysian ringgit and Thai baht also fell 0.1% against the greenback. 

Bucking the trend, the Indonesian rupiah rose 0.1% against the greenback. Indonesia announced a new series of incentives to encourage the sales of locally produced and imported electric vehicles, the latest move in its push to transform itself into southeast Asia's key electric vehicle market and manufacturing hub. (Vaishali Tyagi)

India Rupee: Expected range for rupee - Feb 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:

(Vaishali Tyagi)

End

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

Edited by Ashish Shirke

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