Informist, Monday, Feb 12, 2024

By Sourabh Kumar and Vaishali Tyagi

MUMBAI – The rupee closed steady against the dollar amidst dull volume, as traders refrained from placing large bets ahead of the US CPI data for January due Tuesday, dealers said. They were also waiting for India's CPI data, which is due later today.

"It was a very dull day, and nothing happened," a dealer with a private bank said. "The US CPI is due tomorrow, and we will see what comes there, because that is the main driver of the forex (Foreign exchange) market."

Today, the Indian unit moved in a narrow range of 6 paise, and settled at 83.0025 a dollar. During the day, the rupee touched a high of 82.9700 a dollar. On Friday, the Indian unit had settled at 83.0350 a dollar.

During most of the day, the rupee did not see much movement, and it stayed near 83.00 a dollar. However, it touched its high during the first session. During the closing session of trade, the rupee was weighed by a slight rise in the dollar index. At 1544 IST, the dollar index, which measures the strength in the greenback against a basket of six major currencies, was at 104.16 compared with 104.08 on Friday. It was at 104.15 on Thursday.

Today, the rupee opened steady against the greenback as traders were cautious ahead of the release of the US CPI data due Tuesday. It could give further indications of the rate trajectory in the US, amidst talks of a rate cut. In a Reuters survey of economists, the US CPI likely increased 0.2% on month in January, with an annual rise in prices falling to 3.0% from 3.4% in December. The core CPI was forecast to rise 0.3%, with the on-year increase slowing to 3.8% from 3.9% in December.

On Friday, the annual revisions of CPI data published by the Labor Department showed that prices in December rose slightly less than the earlier estimate. The CPI in December rose 0.2% instead of 0.3% as earlier reported. However, data for November were revised upward to show that the CPI rose 0.2% rather than 0.1% in the Labor Department's previous estimate.

Moreover, Dallas Federal Reserve Bank President Lorie Logan said there is no urgency to cut rates. "The risks that I'm seeing in the economy are becoming more in balance, but I do think we need to take time here to continue to look at the data," she said.

On the domestic front, India's CPI data for January is due to be released later today. Traders await the data, however, major movement in the forex market will be seen after the US CPI data, dealers said. India's CPI data could give further indications of the possible rate trajectory in India at a time when central banks across the world are mulling cutting rates amid the cooling off of domestic inflation. India's annual inflation rate based on CPI likely moderated to a three-month low of 5.1% in January from 5.69% in December, mainly on account of the statistical effect of a high base, according to an Informist poll of 20 economists.

Slightly lower crude oil prices supported the rupee today. Crude oil prices eased slightly after Israel said it had concluded its strikes in the southern part of Gaza-Rafah. The decision comes days after Israeli Prime Minister Benjamin Netanyahu rejected a ceasefire proposal from Hamas. Moreover, Israel said it has freed two Israeli-Argentinian hostages in Rafah. 

At 1630 IST, the April contract of Brent crude oil on the Intercontinental Exchange was at $81.33 a barrel, compared with $82.19 a bbl on Friday and $81.63 a bbl on Thursday.

FORWARDS

Premiums on one-year dollar/rupee forward contracts were broadly steady today, tracking little upward movement in US Treasury yields as investors await the US CPI data due Tuesday for further cues on the interest rate trajectory by the US Federal Reserve, dealers said. Traders also await India's CPI data due later today, they said. 

US Treasury yields rose slightly on Friday ahead of CPI data due this week. Yields were supported by annual revisions published by the Labor Department on Friday, which showed the consumer price index increased slightly more than previously reported in October and November. Premiums on forwards of a currency pair are reflective of the interest rate differential between the two countries.

Market participants see technical support for the one-year dollar/rupee forward premium at 1.90%. At 1601 IST, the premium on the one-year, exact-period dollar/rupee forward contract was 149.73 paise, against 149.71 paise at Friday's close. On an annualised basis, the premium was 1.80%, the same as the previous day's close of 1.80%.  

OUTLOOK

On Tuesday, the rupee will take cues from movement in the dollar index and crude oil prices, dealers said. Investors await the US CPI data for January, due Tuesday.

During the day, the rupee is seen in a range of 82.90-83.30 a dollar, with key technical resistance pegged at 82.90 a dollar.

India Rupee - World FX: Euro dn on remarks of Bank of Italy head

MUMBAI – The euro was down 0.1% against the dollar as Italy's new central bank chief said that interest rates could soon be cut and dismissed fears of any fresh inflationary signs in the eurozone. "Fears that inflation would stop falling after the initial rapid decline – 'the last mile problem' – now appear unwarranted; inflation is falling at the same rate or faster than it has risen," Fabio Panetta, governor of Bank of Italy, said Saturday.

The pound sterling was steady against the dollar ahead of the release of UK unemployment data and CPI for January, both due Tuesday. Today, the Bank of England Governor Andrew Bailey is expected to speak, which could provide further cues on the interest rate trajectory of the country.

The Japanese yen and the Australian dollar were both down 0.1% against the greenback.

Investors are awaiting the US CPI for further cues on the rate trajectory in the US, amidst talks of a rate cut. In a Reuters survey of economists, the US CPI likely increased 0.2% on month in January, with an annual rise in prices falling to 3.0% from 3.4% in December. The core CPI was forecast to rise 0.3% on month, with the annual increase slowing to 3.8% from 3.9% in December.

The dollar index has remained largely steady ahead of the release of US CPI data. At 1442 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 104.13 compared with 104.08 on Friday. It was at 104.15 on Thursday.

On Friday, the annual revisions of CPI data published by the Labor Department showed that prices in December rose slightly less than the earlier estimate. The CPI in December rose 0.2% instead of 0.3% as earlier reported. However, data for November were revised upward to show that the CPI rose 0.2% rather than 0.1% in the Labor Department's previous estimate.  (Sourabh Kumar)

India Rupee: Premiums steady as traders look for cues from US CPI

MUMBAI – Premiums on one-year dollar/rupee forward contracts were broadly steady today, tracking little upward movement in US Treasury yields as investors await the US CPI data due Tuesday for further cues on the interest rate trajectory by the US Federal Reserve, dealers said. Traders also await India's CPI data due later today, they said. 

"Forwards premium were unchanged but earlier they rose as investors looked forward to US CPI data," a dealer at a state-owned bank said. 

Premiums on forwards of a currency pair are reflective of the interest rate differential between the two countries. US Treasury yields rose slightly on Friday ahead of CPI data due this week. Yields were supported by annual revisions published by the Labor Department on Friday, which showed the consumer price index increased slightly more than previously reported in October and November. 

However, the US Treasury notes were not traded in Asia today, as Japanese markets were shut on account of Japan National Foundation Day. Yield on the benchmark 10-year US Treasury note settled at 4.17% on Friday. According to the CME Group's FedWatch tool, 82.5% of Fed fund futures traders expect the Federal funds interest rate to remain at 5.25-5.50% in the March meeting. However, 53.6% of them expect a 25-basis-point rate cut in May.

Investors are eagerly anticipating the US CPI data for January, due Tuesday, which could offer further insights into the US rate trajectory amid talks of a potential rate cut. According to a Reuters survey of economists, it is expected that the US CPI increased 0.2% on month in January, with the annual rise in prices dropping to 3.0% from December's 3.4%. 

At 1453 IST, the premium on the one-year, exact-period dollar/rupee forward contract was 149.48 paise, against 149.71 paise at Friday's close. On an annualised basis, the premium was at 1.80%, same as previous day's close of 1.80%.  (Vaishali Tyagi)  

India Rupee: Steady; traders refrain from placing bets before US CPI

MUMBAI – The rupee was steady against the dollar as traders seemed a bit reluctant about placing large bets ahead of the release of US CPI data for January due Tuesday, dealers said. Traders also await India's CPI data due later today, they said. 

"Major eyes are on US inflation data only and traders have a high expectation that January CPI will arrive stronger-than-expected and mixed sentiments are also building up among importers and exporters," a dealer at a state-owned bank said. 

Investors are eagerly anticipating the US CPI data for January, due Tuesday, which could offer further insights into the US rate trajectory amid talks of a potential rate cut. According to a Reuters survey of economists, it's expected that the US CPI increased 0.2% on month in January, with the annual rise in prices dropping to 3.0% from December's 3.4%. The latest annual revisions of CPI data, released by the Labor Department on Friday, indicated that prices in December rose slightly less than previously estimated, with December's CPI rising by 0.2% instead of the earlier reported 0.3%.

The dollar index has remained largely steady ahead of the release of US CPI data. At 1305 IST, the dollar index, which measures the strength in the greenback against a basket of six major currencies, was at 104.00 compared with 104.08 on Friday. It was at 104.15 on Thursday. Dallas Federal Reserve Bank President Lorie Logan said on Friday that there was no urgency to cut rates. However, she said she would await further inflation data to confirm this.

Dealers expect the Indian unit to be range-bound today. "We are seeing it (dollar/rupee) will remain range bound," a dealer at a big state-owned bank said. Dealers speculated that few banks bought the greenback for some importers, noting the lucrative levels in dollar/rupee pair, which weighed on the Indian unit. 

A fall in domestic indices weighed on the Indian unit. At 1315 IST, both the Sensex and Nifty 50 were 0.8% down on profit booking.

Meanwhile, the easing of crude oil prices is expected to support the rupee, dealers said. Crude oil prices slipped slightly after Israel announced today that they had concluded a series of strikes in the southern part of Gaza. At 1305 IST, the April contract of Brent crude oil on the Intercontinental Exchange was at $81.84 a barrel, compared with $82.19 a bbl on Friday and $81.63 a bbl on Thursday. 

For the rest of the day, the rupee is seen in the range of 82.90-83.30 against the dollar, dealers said. They pegged key technical resistance for the Indian currency at 82.90 a dollar. (Vaishali Tyagi)

India Rupee:Steady before US CPI Tue, India CPI today; low crude aids

MUMBAI – The rupee was steady against the dollar as traders were cautious ahead of the release of US CPI data for January due Tuesday, dealers said. Traders also await India's CPI data due later today, they said.

"The opening was flat, and we expect it (rupee) to strengthen a bit today," a dealer with a state-owned bank said. "The US CPI data is awaited, we are expecting it (rupee) to go up to about 82.95-82.96 a dollar today."

Investors are eagerly waiting for the US CPI data for January due Tuesday, which could give further indications of the rate trajectory in the US, amidst talks of a rate cut. In a Reuters survey of economists, the US CPI likely increased 0.2% on month in January, with an annual rise in prices falling to 3.0% from 3.4% in December. The annual revisions of CPI data released on Friday by the Labor Department showed that prices in December rose slightly less than the earlier estimate. The CPI in December rose 0.2% instead of 0.3% as earlier reported.

The dollar index has remained largely steady ahead of the release of US CPI data. At 0915 IST, the dollar index, which measures the strength in the greenback against a basket of six major currencies, was at 104.04 compared with 104.08 on Friday. It was at 104.15 on Thursday. Dallas Federal Reserve Bank President Lorie Logan said on Friday that there is no urgency to cut rates. However, she said she would await further inflation data to confirm this.

India's CPI data for January is due today. This could give indications of the possible rate trajectory in India at a time when central banks across the world are mulling cutting rates amid the cooling off of domestic inflation. India's annual inflation rate based on CPI likely moderated to a three-month low of 5.1% in January from 5.69% in December, mainly on account of the statistical effect of a high base, according to an Informist poll of 20 economists.

Meanwhile, the easing of crude oil prices is expected to support the rupee, dealers said. Crude oil prices eased slightly after Israel announced today that they had concluded a series of strikes in the southern part of Gaza. At 0919 IST, the April contract of Brent crude oil on the Intercontinental Exchange was at $81.72 a barrel, compared with $82.19 a bbl on Friday and $81.63 a bbl on Thursday.

For the rest of the day, the rupee is seen in the range of 82.90-83.30 against the dollar, dealers said. They pegged key technical resistance for the Indian currency at 82.90 a dollar.  (Sourabh Kumar)

India Rupee: Expected range for rupee - Feb 12

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

(Sourabh Kumar)

Edited by Vidhi Verma

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