Informist, Monday, Dec 13, 2021

By Arushi Jain and Shubham Rana

NEW DELHI – The rupee ended off its highs against the dollar today due to a sharp fall in domestic equity indices, dealers said. The Nifty 50 and the Sensex ended down 0.8% and 0.9%, respectively.

After moving within a range of 14 paise through the day, the Indian rupee closed at 75.7650 a dollar, flat against its close on Friday. The local unit had earlier risen to the day's high of 75.6275 a dollar.

Sentiment for the Indian currency weakened due to a surge in the dollar index, which rose in European trade ahead of policy meetings of major central banks this week, including the US Federal Reserve, the European Central Bank, the Bank of England and the Bank of Japan.

Investors around the world are keen to gauge how quickly the US central bank will taper its pandemic-era asset-purchase programme and also to get any cues on when it might hike rates, said dealers.

At 1634 IST, the dollar index, which measures the strength in the US currency against a basket of six major currencies, was at 96.41 compared with 96.05 on Friday. It was at 96.27 on Thursday.

The Indian rupee had opened higher at 75.6350 a dollar today, tracking gains in Asian and domestic equity indices after inflation data in the US came in line with expectations, said dealers. Data released on Friday showed inflation in the US rose to 6.8% in November on year, the highest since 1982. Market participants had expected a 6.8% on-year rise, overtaking the 6.2% increase in October.

However, local equity indices erased all gains during the day and ended sharply lower, which weighed on the rupee, dealers said.

According to dealers, the rupee also weakened on account of foreign fund outflows from an Indian corporate during the day.

"There were some (foreign fund) outflows related to one Indian corporate. Other than that, there was no major movement in the market today, leading to the rupee being in a narrow range," said a dealer with a state-owned bank. 

Dealers said trade volumes were lower than usual today because traders refrained from placing fresh bets on either side of the rupee ahead of the outcome of the policy meetings of several central banks, especially the US Federal Reserve.

FORWARDS

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

On an annualised basis, the premium on the one-year, exact-period dollar/rupee contract was at 4.55% as against 4.56% on Friday. The premium was at 344.75 paise compared with 345.57 paise on Friday.

OUTLOOK

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

The rupee may find some support from foreign fund inflows into Indian companies raising funds from initial public offerings this week. As many as seven Indian companies are looking to raise around 65 bln rupees through IPOs this week.

"I think the rupee will remain range-bound for the next few weeks since there are factors impacting the rupee from both the sides," said a dealer with a state-owned bank. "It may likely remain in the broad range of 75.40/$1-76.20/$1."

During the day, the rupee is seen at 75.6000-75.8500 a dollar.

India Rupee - World FX: Sterling, euro dn amid rise in Omicron cases

NEW DELHI – The pound sterling fell 0.3% against the dollar in European trade today due to rising cases of COVID-19 variant Omicron and subsequent restrictions imposed in the UK. 

UK Prime Minister Boris Johnson warned on Sunday that the country faces a "tidal wave" of Omicron COVID-19 cases, with two vaccine doses not enough to contain the variant. The UK had recorded a total of more than 3,000 cases of Omicron as of Sunday.  

The Bank of England is due to hold its policy-setting meeting this week and Omicron worries are expected to lead the central bank to opt for caution. 

The euro also fell 0.3% against the dollar today ahead of the European Central Bank's policy meet later this week. 

Investors' fears that heightened concerns over Omicron would hurt economic recovery in the Eurozone could force the ECB to adopt a dovish stance.

Europe’s tally of Omicron cases had reached a total of 766 as of Sunday. 

The dollar edged higher today ahead of the Federal Reserve’s final policy meeting of the year on Wednesday. 

After the release of an upbeat US inflation data on Friday, investors expect the US Fed to quicken the pace of policy normalisation. 

At 1500 IST, the dollar index, which measures the strength in the US currency against a basket of six major currencies, was at 96.40 compared with 96.05 on Friday. It was at 96.27 on Thursday. (Pratiksha)

India Rupee: Up on gains in local equities; dollar strength weighs

MUMBAI - The rupee was up against the dollar today tracking Asian and domestic equity indices that gained after inflation data in the US came in line with expectations, said dealers.

The annualised rate of inflation in the US rose to 6.8% in November, the highest since 1982. Market participants had expected a 6.8% on-year rise, overtaking the 6.2% increase in October.

At 1034 IST, the Nifty 50 and the Sensex were up nearly 0.6% each.

"The Indian rupee which touched a new calendar year low of 75.85/$1 on Friday will receive support from the rise in the emerging market stocks which are mirroring the rise in the US stock market", said a dealer with a brokerage.

Meanwhile, the dollar index remained elevated against a basket of major currencies today amid expectations of tighter central bank policies to fight high inflation globally, which weakened sentiment for the rupee, said dealers.

At 1034 IST, the dollar index, which measures the strength in the US currency against a basket of six major currencies, was at 96.19 compared with 96.05 on Friday. It was at 96.27 on Thursday.

Investors across the world now await the outcomes of monetary policy meetings of key central banks this week for clues on policy normalisation, said dealers.

The US Federal Reserve, the European Central Bank, the Bank of England and the Bank of Japan are scheduled to hold their policy meetings this week, among others.

The rupee is seen in a range of 75.5500-75.8500 a dollar during the day.  (Arushi Jain)

India Rupee - Asia FX: Most rise tracking equities; risk sentiment up

NEW DELHI – Most Asian currencies were up against the dollar in early trade today tracking a rise in Asian equities after US CPI data came in line with expectations.

Data released on Friday showed that US consumer inflation rose 6.8% on year in November, the highest since 1982, but not as high as some market participants had expected.

Hopes that global economic recovery could weather the new Omicron variant of COVID-19, coupled with expectations of tighter central bank policies to fight high inflation supported risk sentiment.

Israeli researchers on Sunday backed claims by Pfizer Inc that a third dose of its COVID-19 vaccine provided significant protection against the new variant, which also boosted risk sentiment.

Market participants are now focusing on key central bank policy meetings this week.

On Wednesday, the US Federal Reserve is expected to speed up its tapering of bond purchases, paving the way for at least one interest rate hike next year.

The European Central Bank, the Bank of England and the Bank of Japan are scheduled to hold their policy meetings this week, among others.

The Indonesian rupiah was up 0.21% against the dollar in early Asian trade today ahead of Bank of Indonesia's meeting on Thursday. According to a Reuters poll, economists expect Bank of Indonesia to hold interest rates steady.

The Korean won was up 0.26%, while the Thai baht was up 0.5%. (Shubham Rana)

India Rupee: Expected range for rupee - Dec 13

NEW DELHI - The following are the expected support and resistance levels for the rupee, as forecast by leading banks and brokerages in an Informist poll:

(Shubham Rana)

End

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

Edited by Avishek Dutta

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