Informist, Tuesday, Jul 26, 2022

By Pratiksha

NEW DELHI – The rupee snapped a three-day gaining streak as dollar purchases of oil companies and foreign portfolio investors offset impact of persistent dollar sales by exporters, dealers said. 

The rupee ended at 79.7800 a dollar as against 79.7300 a dollar on Monday. The unit moved within a narrow range of 10 paise throughout the day.

The Indian unit opened flat against the greenback. However, after trading in a thin range of 79.73-79.78 a dollar for around two hours, the rupee fell to the day's low of 79.8125 a dollar, as some state-owned banks purchased dollars on behalf of oil marketing companies, dealers said.

Prices of crude oil rose over 2% today due to increasing concerns as Russia, a key oil and natural gas supplier, cut gas supply through a major pipeline to Europe.

At 1637 IST, the September contract of Brent crude oil on the Intercontinental Exchange was at $106.60 a bbl as against the previous close of $105.15 a bbl. On Friday, the contract was at $103.20 a bbl.

Dollar purchases on behalf of foreign portfolio investors also weighed on the Indian unit, dealers said. 

However, shortly afterwards the domestic unit pared almost 7 paise of losses and moved to the 79.7300-a-dollar level as some foreign banks sold dollars on behalf of exporters, dealers said. 

Keeping in mind the Reserve Bank of India's dollar sale interventions in the past few trading sessions, exporters believe that the central bank may not let the Indian currency fall below the psychologically crucial level of 80-per-dollar in the near term, dealers said. 

"Exporters are finding it better to book at these levels," a dealer with a state-owned bank said. "The overall sentiment of the market now is of sell on uptick."

According to dealers, month-end dollar sales by exporters also supported the rupee. However, the local unit couldn't breach the technical resistance level of 79.70 a dollar. 

Meanwhile, dealers said volume in the currency market remained lacklustre as traders avoided fresh bets ahead of the US Federal Open Market Committee's monetary policy meeting, which is scheduled to conclude on Wednesday. 

The US Federal Open Market Committee is expected to increase policy rates by 75 basis points. 

With the recent US economic data showing signs of slowdown, investors are eyeing the FOMC statement and Federal Reserve Chairman Jerome Powell’s comments for future course of rate hikes by the central bank.

The local unit jumped to the day's high of 79.7100 a dollar as exporters stepped up their dollar sales, dealers said.

Meanwhile, losses in domestic equities dampened sentiment for the Indian unit, dealers said. Both the Nifty 50 and the Sensex ended 0.9% lower each.

After oil importers continuously purchased the greenback, the rupee went on to close at 79.7800 a dollar. 

FORWARDS

Premiums on dollar/rupee one-year forward contracts ended largely steady today as traders refrained from taking large bets ahead of the US Federal Open Market Committee's monetary policy meeting outcome due Wednesday, dealers said. 

However, earlier today in the premiums had fallen slightly given that some banks were executing buy-sell swaps, buying dollars for delivery on the spot date (two working days from now) and selling them for delivery three months later and six months later noting some arbitrage with dollar deposit rate, dealers said.

The premium on the one-year dollar/rupee contract settled at 248.70 paise, against 247.55 paise on Monday. On an annualised basis, the premium was at 3.12% against the previous close of 3.10%. 

Dealers said there was an arbitrage of 100 basis points between the three-month premium and the dollar deposit rate for the same tenure and an arbitrage of 75 basis points between premium on six-month currency swap and dollar deposit for same tenure. This led market participants to procure dollars domestically on the spot date to deploy it at a higher dollar deposit rate. (Richard Fargose)

OUTLOOK

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

Dealers expect volumes in the domestic spot market to remain lacklustre as market participants may avoid fresh bets ahead of the outcome of the US FOMC monetary policy meeting this week.

"Traders remain on sidelines ahead of the US FOMC," Anindya Banerjee, vice-president, currency derivatives and interest rate derivatives, at Kotak Securities Ltd, said in a note. "We expect volatility to increase post the US Fed. We could see USDINR trade with an upward bias, within a range of 79.60 and 80.00 levels on spot."

Investors now await US crude supply data from the American Petroleum Institute, due later in the day.

Dealers expect RBI will continue to intervene through dollar sales to protect the rupee from depreciating beyond the psychologically crucial 80-per-dollar mark.

Dealers see technical resistance for the rupee at 79.70 a dollar.

During the day, the rupee is seen at 79.60-79.95 a dollar.

India Rupee: Premiums steady on caution ahead of US FOMC outcome Wed

MUMBAI – Premiums on dollar/rupee one-year forward contracts were steady today as traders refrained from taking large bets ahead of the US Federal Open Market Committee's monetary policy meeting outcome due Wednesday, dealers said. 

Earlier in the day, premiums had fallen slightly given that some banks were executing buy-sell swaps, which means they were buying dollars for delivery on the spot date (two working days from now) and selling them for delivery three months later and six months later, noting some arbitrage with dollar deposit rate, dealers said.      

The premium on the one-year dollar/rupee contract was 248.70 paise, against 247.55 paise on Monday. On an annualised basis, the premium was at 3.12% against the previous close of 3.10%. 

Dealers said there was an arbitrage of 100 basis points between the three-month premium and the dollar deposit rate for the same tenure and an arbitrage of 75 basis points between premium on six-month currency swap and dollar deposit for the same tenure. This led market participants to procure dollars domestically on the spot date to deploy it at a higher dollar deposit rate. 

"The buy (dollars) leg of the buy-sell is happening in the spot market, which (dollars) I am then deploying for 6 months," a dealer with a state-owned bank said.  (Richard Fargose)

India Rupee:Off lows as exporters sell dlrs; oil cos' dlr buys weigh

India Rupee: Off lows as exporters sell dlrs; oil cos' dlr buys weigh

NEW DELHI – The rupee came off its earlier lows against the greenback as some foreign banks sold dollars on behalf of exporters, dealers said. 

Keeping in mind the Reserve Bank of India's dollar sale interventions in the past few trading sessions, exporters believe that the central bank may not let the Indian currency fall below the psychologically crucial level of 80-per-dollar in the near term, dealers said. 

Earlier today, the rupee fell to 79.8125 a dollar, as some state-owned banks purchased dollars on behalf of oil marketing companies, dealers said.

Meanwhile, dealers said volume in the currency market remained lacklustre as traders avoided fresh bets ahead of the US Federal Open Market Committee's monetary policy meeting scheduled to conclude on Wednesday. 

For the rest of the day, the Indian unit is seen moving in the range of 79.6000-79.9000 a dollar. (Pratiksha)

India Rupee - Asia FX: Most units steady on caution before Fed meet

MUMBAI - Most Asian currencies were steady against the US dollar today as market participants are avoiding fresh positions ahead of the US Federal Open Market Committee's monetary policy meet.

The two-day US FOMC meeting will start later today. The Committee is expected to increase policy rates by 75 basis points at the conclusion of its policy meeting on Wednesday. 

With the recent US economic data showing signs of a slowdown, investors are eyeing the FOMC's statement and Federal Reserve Chair Jerome Powell's comments for future course of rate hikes by the central bank.

Bucking the trend, the won gained 0.3% as South Korea's economy expanded 0.7% in Apr-Jun, compared with an expected 0.4% growth. (Richard Fargose)

India Rupee: Largely steady before Fed meet; fall in local shrs weighs

NEW DELHI – The rupee was largely steady against the greenback today as traders avoided fresh bets ahead of the US Federal Open Market Committee's two-day monetary policy meeting that starts later today, dealers said.

The US Federal Open Market Committee is expected to raise policy rates by 75 basis points at the conclusion of its policy meeting on Wednesday. A hike of this magnitude will take the Fed target rate to a pre-pandemic range of 2.25-2.50%.

A fall in domestic share indices weighed on the Indian unit, dealers said. At 0930 IST, both the Nifty 50 and the Sensex traded 0.4% lower.

"The narrow range of 79.65-79.80 should sustain even today," a dealer with a state-owned bank said. "Exporters may come around these levels since further sharp depreciation in the rupee seems to be off the table for now."

Dealers have pegged immediate technical resistance for the rupee at 79.70 a dollar.

For the rest of the day, the Indian unit is seen moving in the range of 79.6000-79.9500 a dollar. (Pratiksha)

India Rupee: Expected range for rupee - Jul 26

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

(Richard Fargose)

End

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

Edited by Arshad Hussain

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