Informist, Thursday, Apr 20, 2023

By Kabir Sharma

MUMBAI – After trading in a narrow range throughout the day, the rupee ended higher against the dollar as foreign banks sold the greenback for foreign fund inflows into Indian corporates, dealers said.

This was despite persistent dollar purchases by state-owned banks on behalf of oil marketing companies. 

The rupee snapped its three-day losing streak and today settled at 82.1475 a dollar against Wednesday's close of 82.2250 after trading in a narrow range of 12 paise.

The Indian unit opened almost flat against the greenback but moved higher as foreign banks sold dollars on behalf of exporters, around key technical support of 82.20 a dollar, dealers said. 

The rupee was also supported by easing crude oil prices. A fall in crude oil prices reduces India's import bill which in turn supports the rupee.

Oil prices fell more than 2% on Wednesday and reached their lowest point in about three weeks, despite a sharp decline in US crude inventory, as the dollar strengthened due to fear that higher interest rates by the US Fed could hamper demand for oil from top consumer countries. 

US crude stockpiles fell by 4.6 mln barrel as refinery runs and exports rose, while gasoline inventory jumped unexpectedly on disappointing demand, according to the US energy information administration. The crude stockpile decline was far steeper than analysts' and the American Petroleum Institute's estimates.

At 1541 IST, the June contract of Brent crude oil on the Intercontinental Exchange was at $81.71 a barrel, against $83.12 a bbl on Wednesday. It was at $84.77 a bbl on Tuesday. 

The dollar index fell slightly after higher than expected inflation print from the UK boosted the pound sterling. This also supported the rupee, dealers said. UK's consumer price index for March rose by an annual 10.1%. This was above a projection of 9.8% by economists polled by Reuters.

Bank of England had last month raised interest rates by 25 basis points to 4.25%, and traders are pricing in a 72% probability of a further 25 bps hike at its policy meeting on May 11.

Further into the trading session, the rupee rose to the day's high of 82.11 a dollar as foreign banks sold dollars for foreign fund inflows into Indian corporates, dealers said. 

"There were some corporate flows in the morning which pushed the pair lower, some flows were there in equities also but more were on the corporate side," a dealer with a foreign bank said.

However, state-owned banks stepped in to buy the dollar around the day's high, on behalf of oil marketing companies, noting a fall in crude oil prices. This pushed the rupee to the day's low of 82.23 a dollar.

"Oilers were buying at dips as soon as it was touching 82.11-82.12 as they have a view that the rupee might depreciate further," a dealer with a big state-owned bank said.

The greenback remained broadly firm against other major currencies as market participants expect the US Federal Reserve to deliver another 25 bps rate hike in their next policy meeting scheduled for May 2-3. The dollar index has gained 0.3% so far this week, on course for its strongest week since late February. 

At 1614 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 101.89 as against 101.94 on Wednesday. It was at 101.72 on Tuesday. 

FORWARDS

The premium on the one-year dollar/rupee forward contract ended higher, tracking a fall in US Treasury yields, dealers said.

The US Treasury yields declined after German producer price index fell 2.6% in March, against expectation of 0.5%. Premiums on forwards of a currency pair are reflective of the interest rate differential between the two countries. 

Meanwhile, exporters sold dollars for forward delivery, noting relatively higher levels, which capped gains for the premiums, dealers said. 

The premium on the one-year dollar/rupee contract was 181.34 paise, against 178.53 paise on Wednesday. On an annualised basis, the premium was at 2.20%, as against the previous close of 2.16%.

OUTLOOK

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

Market participants now look forward to UK retail sales data, scheduled for release on Friday. They also look forward to the release of manufacturing and services purchasing managers index from the US and the eurozone.   

Dealers have pegged the next technical support for the rupee at 82.50 a dollar. The currency is expected to move in the range of 81.90-82.40 a dollar during the day.

India Rupee - World FX: Sterling up on higher than expected UK CPI

MUMBAI – The pound sterling was up 0.1% against the dollar today as a higher than expected UK inflation print raised expectations of further rate hikes by the Bank of England. The pound had touched a one-week high on Wednesday after the data was released, which showed UK's consumer price index rose by an annual 10.1%. This was above a projection of 9.8% by economists polled by Reuters.

Bank of England had last month raised interest rates by 25 basis points to 4.25%, and traders are pricing in 72% probability of a further 25 bps hike at its policy meeting on May 11.

UK Finance Minister Jeremy Hunt said the figures reaffirm why the government must continue efforts to drive down inflation. Core inflation, which excludes volatile food, energy, alcohol and tobacco prices, rose by 5.7% on year, unchanged from February's annual climb, which will be a concern for the central bank.

The euro was up 0.2% against the dollar as European Central Bank Governing Council member Klaas Knot said in an interview to Irish Times today that it is "too early to talk about a pause in interest rate rises." 

The Japanese yen was up 0.1% against the greenback. (Kabir Sharma)

India Rupee: In tight range; bks' dlr sales for likely FX inflows aid

NEW DELHI – The rupee remained in a tight range against the dollar today as greenback sales by foreign banks, likely for foreign fund inflows, offset the impact of state-owned banks' dollar purchases for oil importers, dealers said.

So far today, the rupee has moved in a narrow range of 12 paise.

"From morning onwards, some big corporates are selling (dollars) for inflows," a dealer at a big state-owned bank said. "Currently, it's stabilised after the fixing (dollar sales for daily reference rate fixing). It (rupee) may go down a bit later in the day." 

Some dealers said a UK-based bank sold the greenback for foreign fund inflows.

Dealers said some banks also sold the greenback around 82.20 a dollar level on behalf exporters. This also helped the upward movement of the local unit.

However, state-owned banks stepped into buy dollars on behalf oil marketing companies that wanted to take advantage of relatively lower crude oil prices. This limited gains for the rupee.

Crude oil prices continued to fall today as investors remained wary about the demand outlook for the commodity as a possible rate hike by the US Federal Reserve may slow down the global economy.

At 1313 IST, the June contract of Brent crude oil on the Intercontinental Exchange was at $81.81 a barrel as against $83.12 a bbl on Wednesday. It was at $84.77 a bbl on Tuesday.

Dealers have pegged the next technical support for the rupee at 82.30 a dollar. The currency is seen at 81.90-82.40 a dollar during the day.  (Ananya Chaudhuri)

India Rupee: Up as foreign banks sell dollars likely for exporters

India Rupee: Up as foreign banks sell dollars likely for exporters

NEW DELHI – The rupee rose against the dollar as foreign banks stepped in to sell dollars likely on behalf of exporters, dealers said

"There's some selling (of dollars). It was not much cause it (rupee) didn't move much," a dealer at a state-owned bank said. 

A fall in crude oil prices also supported the local unit, dealers said. Crude oil prices fell almost 2% on Wednesday due to fears that potential rate hikes by the US Federal Reserve may push the global economy into a recession, subsequently hitting demand for the commodity.

At 0943 IST, the June contract of Brent crude oil on the Intercontinental Exchange was at $82.32 a bbl as against $83.12 a bbl on Wednesday. It was at $84.77 a bbl on Tuesday.

Further, a rise in domestic share indices also supported the local unit, dealers said. At 0943 IST, the Nifty 50 and Sensex were 0.3% and 0.4% higher, respectively.

Dealers have pegged the next technical support for the rupee at 82.30 a dollar. The currency is seen at 81.90-82.40 a dollar during the day. (Ananya Chaudhuri)

India Rupee - Asia FX: Most dn as dlr index rises on rate hike fears

NEW DELHI – Most Asian currencies were down against the US unit today as the dollar index rose due to worries over further rate hikes by the US Federal Reserve in the backdrop of persistent global inflation.

The dollar index rose on Wednesday after data showed that UK consumer price inflation fell to 10.1% on year in March--from 10.4% in February--which was much higher than market estimates of a 9.8% fall, indicating that price pressures remained stubborn. 

The Fed fund future market is now factoring in an 85.7% chance that the Fed may hike rates by another 25 basis points at its next policy review meeting in May.

At 0909 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 101.96 as against 101.94 on Wednesday. It was at 101.72 on Tuesday.

The South Korean won and Philippine peso were both 0.2% lower against the US unit.

Bucking the trend, the Malaysian ringgit was up 0.2% after research reports from RHB Investment Bank said the country's trade performance will pick up in the second half of the year. (Ananya Chaudhuri)

India Rupee: Expected range for rupee - Apr 20

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

(Ananya Chaudhuri)

End

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

Edited by Akul Nishant Akhoury

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