Informist, Monday, Feb 14, 2022

By Pratiksha and Arushi Jain

NEW DELHI – The rupee ended sharply lower after erasing all gains against the dollar today because the safe-haven US unit strengthened further in European trade amid escalating fears of an invasion of Ukraine by Russia, dealers said.

At 1625 IST, the dollar index, which measures the strength of the US currency against a basket of six major currencies, was at 96.25, against 96.03 on Friday. It was at 95.55 on Thursday. 

The dollar index had risen to as much as 96.32 earlier today.

After moving in a range of nearly 28 paise through the day, the rupee settled at 75.6050 a dollar, its lowest level since Dec 20. The Indian unit stood at 75.3800 a dollar at 1530 IST on Friday. 

Russia has stationed more than 100,000 troops at the border with Ukraine, but has so far denied plans of an invasion. The US warned on Sunday that Russia could invade Ukraine at any time and might create a surprise pretext for an attack, while also reaffirming a pledge to defend "every inch" of NATO territory.

Today, some banks stepped in to purchase dollars on behalf of oil marketing companies, noting sharply high crude oil prices, which further weighed on the local unit, said dealers.

"There was lesser buying (of dollars) for oil importers initially, but in the last few hours, we saw aggressive buying (of dollars) for oilers," said a dealer with a state-owned bank.

At 1625 IST, the April contract of Brent crude on the Intercontinental Exchange was at $94.47 per bbl, compared with the previous close of $94.44 per bbl. 

Brent crude prices had risen to as much as $96.16 a bbl earlier today.

Prices of Brent crude continued to surge and breached the $96-per-barrel mark today due to concerns about tight global oil supply amid mounting fears of a Russian invasion of Ukraine, dealers said. Such an invasion could result in imposition of US and European sanctions that would disrupt exports from the world's top producer in an already tight market.

These tensions come amid the Organization of the Petroleum Exporting Countries and its allies struggling to meet production goals. The cartel had pledged to increase production by only 400,000 bbl per day until March.

According to projections by investment banking company JP Morgan, oil prices could surge to as high as $120 a bbl if Russia's crude oil exports are derailed due to tensions with Ukraine.

A slump in domestic equity indices also weighed on sentiment for the local unit, according to dealers. Both the Nifty 50 and the Sensex closed over 3% lower.

The Indian currency touched a low of 75.6350 a dollar today.

In early trade, the local unit had recovered losses and rose to as much as 75.3575 a dollar as some state-owned banks stepped in to sell the greenback on behalf of exporters at relatively higher dollar/rupee levels of 75.50-75.55 a dollar, said dealers.

Some dealers said banks also sold dollars on behalf of the Reserve Bank of India, which wanted to prevent any sharp movement in the Indian currency. This also provided support to the rupee, dealers said. 

However, all gains were erased after dollar sales by the banks subsided, said dealers.

Market participants worldwide are now keenly waiting for minutes of the US Federal Reserve's meeting in January, due on Wednesday, for any signals on the central bank's policy tightening plans. 

FORWARDS

The premium on the dollar/rupee forwards contract fell today due to dollar sales by banks on behalf of exporters, dealers said.

On an annualised basis, the premium on the one-year, exact-period dollar/rupee contract was 3.76%, compared with 3.81% on Friday. The premium was 284.13 paise compared with 287.22 paise on Friday.

OUTLOOK

On Tuesday, the rupee may take opening cues from the overnight movement in the dollar index and prices of Brent crude oil, said dealers.

"Mounting risk over Russia–Ukraine, higher crude oil prices, strong dollar index followed by higher than expected US inflation data and chances of aggressive rate hikes by Fed would continue to hurt the rupee going forward," said a dealer with a brokerage house.

"RBI intervention may be seen during the week to restrict the volatility in the rupee, but it may not help limit the weakness in the local currency".

Dealers have now pegged strong key technical support for the rupee at 75.70 a dollar.

During the day, the rupee is seen in a range of 75.3000-75.7000 a dollar.

India Rupee: Slips as oil cos buy dollars, PSU bks' dlr sales subside

NEW DELHI – After a brief recovery against the dollar in intraday trade today, the rupee slipped again as some banks purchased dollars on behalf of oil marketing companies, noting sharply higher crude oil prices, said dealers. 

Prices of Brent crude oil continued to rise and were near the $95-per-barrel mark due to concerns about tight global oil supply, amid escalation in concerns of a possible Russian invasion of Ukraine, dealers said.

At 1430 IST, the April contract of Brent crude on the Intercontinental Exchange was at $94.19 per bbl, compared with the previous close of $94.44 per bbl. 

The reversal in a recovery in the Indian unit was also because dollar sales by some state-owned banks subsided, said dealers.

Earlier today, some state-owned banks stepped in to sell the greenback on behalf of exporters at relatively higher dollar/rupee levels of 75.50-75.55 a dollar.

The rupee is seen at 75.4000-75.7000 a dollar for the rest of the day. (Pratiksha)

India Rupee: Recovers as banks sell dollars for exporters

NEW DELHI – The rupee recovered against the dollar today because some state-owned banks stepped in to sell the greenback on behalf of exporters at relatively higher dollar/rupee levels of 75.50-75.55 a dollar, said dealers.

Some dealers said banks sold dollars also on behalf of the Reserve Bank of India, which wanted to curtail any sharp movement in the Indian currency. This further supported the rupee, they said.

On the flip side, some banks continued to purchase the US unit on behalf of oil marketing companies, noting sharply high Brent crude oil prices, which limited further gains in the Indian unit, said dealers.

The prices of crude oil continued to surge due to concerns about tight global oil supplies amid escalation in fears of a possible Russian invasion of Ukraine, dealers said.

At 1330 IST, the April contract of Brent crude on the Intercontinental Exchange was at $95.65 per barrel, compared with the previous close of $94.44 per bbl. 

A sharp fall in domestic equity indices also weighed on sentiment for the local unit, according to dealers. At 1330 IST, the Nifty 50 and the Sensex were down nearly 1.9% each.

The rupee is seen at 75.3000-75.6000 a dollar for the rest of the day.  (Pratiksha and Arushi Jain)

India Rupee: Sharply down as dollar, crude surge on Ukraine crisis

NEW DELHI – The rupee fell sharply against the dollar today because the safe-haven US unit surged against other major currencies amid escalating fears of an invasion of Ukraine by Russia, dealers said.

Russia has amassed more than 100,000 troops on the Ukraine border but has so far dismissed plans to invade the country. Meanwhile, the US warned on Sunday that Russia could invade Ukraine at any time and could create a surprise pretext for an attack. 

At 1043 IST, the dollar index, which measures the strength in the US currency against a basket of six major currencies, was at 96.09, against 96.03 on Friday. It was at 95.55 on Thursday. 

Prices of Brent crude oil also surged and breached the $95-per-barrel mark because a dispute between Russia and Ukraine is likely to hit global oil supplies as Russia is one of the largest producers. This also weighed on sentiment for the Indian unit, said dealers.

At 1043 IST, the April contract of Brent crude on the Intercontinental Exchange was at $95.63 per bbl, compared with the previous close of $94.44 per bbl. 

A sharp fall in domestic equity indices amid growing concerns that Russia could invade Ukraine also weighed on sentiment for the local unit, according to dealers. At 1043 IST, the Nifty 50 and the Sensex were down nearly 1.8% each.

Dealers have pegged immediate key technical support for the rupee at 75.7000 a dollar.

During the day, the rupee is seen at 75.3000-75.7000 a dollar.  (Pratiksha)

India Rupee - Asia FX: Most units down amid Russia-Ukraine tension

MUMBAI – Most Asian currencies fell against the dollar in early trade today because investors flocked to the safe-haven asset dollar amid escalating fears of an invasion of Ukraine by Russia.

Russia has amassed more than 100,000 troops on the Ukraine border but has so far denied it plans to invade. In a recent development, White House National Security Adviser Jake Sullivan said on Friday that Russia now has sufficient forces to conduct a major military operation against Ukraine, and an assault could begin "any day now".

Both the US and the UK have asked their citizens to leave Ukraine as soon as possible.

At 0950 IST, the dollar index, which measures the strength in the US currency against a basket of six major currencies, was at 96.08, against 96.03 on Friday. It was at 95.55 on Thursday. 

The Taiwan dollar and the Philippine peso fell nearly 0.2% and 0.1%, respectively, against the dollar. 

Meanwhile, the Indonesian rupiah was a tad up against the dollar today after strong retail sales figures for December were reported in the country.

Indonesia's retail sales rose to 13.8% from 10.8% on year in December, per the Bank Indonesia Survey.

The Malaysian ringgit also recovered some losses and firmed up against the dollar after a decrease in the number of COVID-19 cases in the country. (Arushi Jain)

India Rupee: Expected range for rupee - Feb 14

NEW DELHI – The 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 Avishek Dutta

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