Informist, Thursday, Sep 28, 2023

MUMBAI – After trading in a tight range for the entire session, the rupee ended higher against the dollar today as banks persistently sold the US unit likely on behalf of the Reserve Bank of India and exporters, dealers said. 

Today, the Indian currency settled 0.1% higher against the US unit at 83.1850 compared to 83.2300 a dollar on Wednesday. The rupee traded in a tight range of 11 paise against the greenback throughout the day. 

Further, the rupee emerged today as the second best performing currency among its Asian peers after the Chinese yuan. Asian currencies fell against the greenback in the range of 0.1-0.5%.  

The Indian unit started the day steady against the dollar at 83.2250. Banks sold the greenback, likely on behalf of the RBI in the offshore non-deliverable forwards market, which offset the impact of sharp gains in crude oil prices and the dollar index, dealers said.

Crude oil prices rose to a 10-month high on Wednesday after data showed US crude stocks fell more than expected, intensifying worries about the supply prospects going forward. At 1702 IST, the October contract of Brent crude oil on the Intercontinental Exchange was at $96.24 a barrel, as against $96.55 a bbl on Wednesday. It was at $93.96 a bbl on Tuesday.

The dollar index touched a fresh 10-month high after Federal Reserve Bank of Minneapolis President Neel Kashkari said that the current strength in the US economy makes it difficult to say if the central bank is done raising rates.

Moreover, stronger than expected durable goods order data from the US also supported the greenback. In the US, data from the Commerce Department showed orders for durable goods rose 0.2% on month in August against a 0.5% fall forecast by a Reuters' poll. Orders declined 5.6% on month in July.

The dollar index, which measures the strength in the dollar against a basket of six major currencies, was at 106.33 at 1703 IST against Wednesday's close of 106.67. The index was at 106.16 on Tuesday.

The rupee rose to 83.1300 against the US unit, touching the day's high as state-owned banks rushed to sell the greenback in the domestic spot market likely for the RBI. Exporters and foreign portfolio investors also sold the US currency, which further supported the Indian currency, dealers said. 

"In the morning there were (dollar) sales from foreign banks mostly. As the dollar index gained, buying (of dollars) was there," a dealer at a state-owned bank said. "Volumes were down compared to the past two-three days due to this holiday." 

The rupee moved in a range of 11 paise against the dollar today amid low volumes in the currency market on account of Eid-e-Milad holiday.

The local unit erased some of its earlier gains against the dollar and moved to the day's low of 83.2450 during the day as importers stepped in to purchase the greenback, expecting further depreciation of the local unit going forward.

A slump in local share indices also exerted pressure on the rupee. Today, the benchmark Nifty 50 and Sensex ended down 1.0% and 0.9%, respectively.

FORWARDS

Premiums on dollar/rupee forwards ended at an over three-month high tracking sharp gains in the US Treasury yields and dollar index, dealers said.

The yield on the benchmark 10-year US Treasury note touched the highest level since October 2007, putting pressure on other riskier assets as traders expect interest rates in the US to remain higher for a prolonged period. The dollar index was also trading near a 10-month high which also supported premiums on dollar/rupee forwards.

Premiums on forwards of a currency pair are reflective of the interest rate differential between the two countries. 

Market participants see strong technical support for the one-year dollar/rupee forward contract at 2.00%.

The premium on the one-year, exact-period dollar/rupee forward contract was at 152.64 paise, against 150.38 paise at Wednesday's close. On an annualised basis, the premium was at 1.83%, against its previous close of 1.80%. 

OUTLOOK

On Friday, the rupee will take cues from the dollar index and crude oil prices, dealers said.

"This resilience (of the rupee) is surely attributed to the Reserve Bank of India's intervention. Nonetheless, it is anticipated that the rupee's movements will remain relatively stable until India's upcoming monetary policy decision on Oct 6," said Amit Pabari, managing director and chief executive officer of CR Forex.

Dealers have pegged key technical support for the rupee at 83.30 a dollar. During the day, the rupee is seen in the range of 82.80-83.30 a dollar.

India Rupee: Gives up some gains as importers buy dollars

MUMBAI – The rupee gave up some of its early gains against the dollar as importers, who expect the rupee to fall further, bought the greenback, dealers said.

A jump in India's current account deficit to $9.2 bln in Apr-Jun from a seven-quarter low of $1.3 bln in Jan-Mar also soured sentiment towards the Indian currency.

The Reserve Bank of India said the rise in the current account deficit was primarily on account of a higher trade deficit, coupled with a lower surplus in net services, and a decline in private transfer receipts.

Earlier in the day, the Indian currency had risen to a high of 83.1300 against the dollar.

A sharp rise in crude oil prices also exerted pressure on the local unit, dealers said. Oil futures surged 3% on Wednesday after data showed US crude stocks fell more than expected, intensifying worries about the supply prospects going forward.

At 1402 IST, the October contract of Brent crude oil on the Intercontinental Exchange was at $96.84 a barrel, as against $96.55 a bbl on Wednesday. It was at $93.96 a bbl on Tuesday.

Slump in local share indices also weighed on the rupee, dealers said. At 1402 IST, both the benchmark Nifty 50 and Sensex were down 0.8%.

"Clearly, all global macros are against INR. These are loose levels cause the RBI is there," said a dealer at a private bank. "Initially, foreign banks were selling (dollars) for fixed interest, but nationalised banks are also there. Subsequently, importers saw opportunity to buy (dollars) around 83.15 (a dollar) level."

However, state-owned banks, likely on behalf of the RBI, stepped into the spot market to sell dollars, which limited losses for the rupee.

State-owned and foreign banks also sold the US unit for exporters and likely foreign portfolio investors who were looking to invest in domestic equities, which further supported the local unit, dealers said.

Dealers said the Indian unit traded in a narrow range of 11 paise against the dollar amid low volumes in the currency market on account of Eid-e-Milad holiday.

Dealers see key immediate technical support for the rupee at 83.30 a dollar. During the day, the rupee is seen in the range of 83.00-83.30 a dollar. (Ananya Chaudhuri and Sourabh Kumar) 

India Rupee - Asia FX: Most dn as dlr index hits fresh 10-month high

MUMBAI – Most Asian currencies fell against the dollar as the dollar index touched a fresh 10-month-high today on the back of stronger-than-expected economic data from the US.

Data from the the US Commerce Department showed orders for durable goods rose 0.2% on month in August against a 0.5% fall forecast by a Reuters' poll, which strengthened the dollar index further. 

The dollar index rose to a fresh 10-month high of 106.84 on Wednesday, which weighed on the Asian currencies.

The index, which measures the strength in the dollar against a basket of six major currencies, was at 106.63 at 1120 IST against Wednesday's close of 106.67. The index was at 106.16 on Tuesday.

The current strength in the US economy makes it difficult to say if the central bank is done raising rates, Federal Reserve Bank of Minneapolis President Neel Kashkari said in an interview with CNBC. This further cemented expectation that the US Federal Reserve will keep the interest rate higher for a longer period. The Fed is expected to hike rates once more this year.

Apart from the South Korean won and the Malaysian ringgit falling 0.5% and 0.4%, respectively, against the dollar, the Thai baht fell against the greenback. The baht fell 0.3% against the dollar, despite Thailand's central bank raising benchmark rate by 25 basis points on Wednesday.

The Indonesian rupiah was also down 0.2% against the dollar.

Market participants await the US Core Personal Consumption Expenditure Price index, which is the Fed's preferred gauge for consumer inflation, due Friday. (Sourabh Kumar and Vaishali Tyagi)

India Rupee: Steady even as crude oil prices touch 10-month high

MUMBAI – The rupee opened steady against the dollar today despite a surge in crude oil prices and the dollar index as banks sold the greenback, likely on behalf of the Reserve Bank of India in the offshore non-deliverable forwards market, dealers said.  

"Despite mounting pressure on the offshore, the USDINR (dollar/rupee) displayed relative stability and remained below 83.30 levels, defying the weakness seen in other Asian currencies. This resilience surely attributes to the Reserve Bank of India's intervention," said Amit Pabari, managing director, CR Forex.   

Some dealers speculated that banks sold dollars on behalf of the central bank in the spot market to prevent the rupee from falling to a record low.

Moreover, crude oil prices surged to a 10-month high on Wednesday, after an unexpected fall in the US crude inventory. 

US crude stocks fell by 2.2 mln barrels last week to 416.3 mln barrels, government data showed, far exceeding the

320,000-barrel drop analysts expected in a Reuters poll.

The surge in crude oil prices comes in the backdrop of an extended supply cut by top exporters Saudi Arabia and Russia. The two countries have cut production by 1.3 mln bbl a day till the end of the year. 

Dealers see key immediate technical support for the rupee at 83.30 a dollar. During the day, the rupee is seen in the range of 83.00-83.30 a dollar. (Kabir Sharma)

India Rupee: Expected range for rupee - Sep 28

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

(Kabir Sharma)

End

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

Edited by Maheswaran Parameswaran

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