Informist, Monday, Jul 25, 2022

By Pratiksha and Richard Fargose

NEW DELHI – The rupee rose against the greenback for the third consecutive session today due to continuous dollar sales by foreign portfolio investors and exporters, dealers said.

The rupee closed 0.2% higher at 79.7300 a dollar. 

The Indian unit opened largely steady at 79.8450 a dollar as against 79.8550 a dollar on Friday. However, shortly afterwards, it rose to the 79.78 a dollar level as some banks sold dollars on behalf of exporters, dealers said. 

Dealers said the Reserve Bank of India's dollar sale interventions in the past few trading sessions led exporters to believe that the central bank may not allow the domestic currency to fall below the psychologically crucial level of 80-per-dollar so soon. 

"As 80 (a dollar) level is seen as a strong resistance (for dollar/rupee), exporters are selling dollars for near-term receivables," a dealer with a state-owned bank said. "But, oil importers' dollar demand and caution ahead of FOMC will keep the market in a tight range till Thursday."

The rupee then traded in a narrow range of 79.80-79.85 a dollar for a duration of almost four hours.

Dealers said traders exercised caution and avoided placing fresh bets ahead of the US Federal Open Market Committee's monetary policy meeting this week.

The US central bank is expected to hike the interest rate by 75 basis points in its two-day policy meeting, which concludes on Wednesday.

Fed members have communicated in recent weeks that they prefer a 75-bps rate hike in this policy meeting, instead of a 100 bps one, even as inflation in the US came in at 9.1% in June, a 40-year-high.

The outcome of the US policy meeting is keenly awaited after the European Central Bank hiked its key interest rate by 50 basis points to 0% last week, which turned the focus of investors towards an economic slowdown.

Dealers said some banks purchased dollars on behalf of oil importers, which weighed on the Indian unit.

The Indian currency jumped almost 10 paise and rose to the day's high of 79.6900 a dollar as some foreign banks, including a UK-based bank, sold dollars for foreign portfolio investors. 

"There was good amount of selling (of dollars) by foreign banks for inflows today," a dealer with a private bank said. Foreign portfolio investors have been net buyers for the past three to four trading sessions. 

Meanwhile, losses in domestic equities dampened sentiment for the Indian unit, dealers said. The Nifty 50 and the Sensex ended 0.5% and 0.6% lower, respectively.

FORWARDS

Premiums on dollar/rupee forward contracts fell because exporters sold dollars for forward delivery, noting strong technical support for the rupee at around 80/$1, dealers said.

The premium on the one-year dollar/rupee contract settled at 247.55 paise, against 251.18 paise on Friday. On an annualised basis, the premium was at 3.10%, against the previous close of 3.15%.

The dollar/rupee exchange rate is a component of the premium that exporters receive on selling dollars for forward delivery.

Exporters had refrained from selling forward dollars in large quantum as they expected the rupee to fall past 80 and therefore the dollar/rupee exchange rate to rise further. However, they sold the greenback for forward delivery on observing that the rupee hasn't been able to sustain below the 80-a-dollar mark.

Dealers said the RBI's dollar sale interventions in the past few trading sessions led exporters to believe that the domestic currency might not fall sharply below the psychologically crucial level of 80-per-dollar soon. 

Dealers also said as the spot rupee has remained steady after briefly breaching 80/$1 mark on Tuesday, the panic forward dollar buying by the importers has also subsided since Friday. 

Volumes in the forward market remained subdued as market participants avoided fresh bets ahead of the outcome of the FOMC monetary policy meeting this week.

OUTLOOK

On Tuesday, 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.

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 support for the rupee at 80.00 a dollar.

During the day, the rupee is seen at 79.60-80.00 a dollar.

 India Rupee: Premiums down as exporters sell forward dollars

MUMBAI – Premiums on dollar/rupee forward contracts fell because exporters sold dollars for forward delivery, noting strong technical support for the rupee at around 80/$1, dealers said.

The premium on the one-year dollar/rupee contract was 249.50 paise, against 251.18 paise on Friday. On an annualised basis, the premium was at 3.13%, against the previous close of 3.15%.

The dollar/rupee exchange rate is a component of the premium that exporters receive on selling dollars for forward delivery. Exporters had refrained from selling forward dollars in large quantum as they expected the rupee to fall past 80 and therefore the dollar/rupee exchange rate to rise further. However, they sold the greenback for forward delivery on observing that the rupee hasn't been able to sustain below the 80-a-dollar mark.

Dealers said the Reserve Bank of India's dollar sale interventions in the past few trading sessions led exporters to believe that the domestic currency might not fall sharply below the psychologically crucial level of 80-per-dollar soon. 

"As the rupee looks like anchored at current levels, exporters are selling dollars in spot markets and also hedging their receivables in the forwards market," a dealer with a state-owned bank said. 

Dealers also said as the spot rupee has remained steady after briefly breaching 80/$1 mark on Tuesday, the panic forward dollar buying by the importers also subsided since Friday. 

Volumes and movement in the forward market are likely to remain subdued till Thursday, as market participants are expected avoid fresh bets ahead of outcome of the US Federal Open Market Committee's monetary policy meeting this week, dealers said. (Richard Fargose)

India Rupee: In narrow range on caution ahead of US FOMC decision

NEW DELHI – The rupee remained in a narrow range against the dollar as traders avoided fresh bets ahead of the US Federal Open Market Committee's monetary policy meeting this week, dealers said. 

Market participants expect the US Federal Reserve to raise the interest rate by 75 basis points in its two-day policy meeting, which concludes on Wednesday.

Earlier in the day, the rupee touched the day's high of 79.7800 a dollar, as some banks sold dollars on behalf of exporters, dealers said. 

Dealers said the Reserve Bank of India's dollar sale interventions in the past few trading sessions led exporters to believe that the central bank may not allow the domestic currency to fall below the psychologically crucial level of 80-per-dollar so soon. 

Meanwhile, some banks purchased dollars on behalf of oil importers, which weighed on the Indian unit, dealers said.

Dealers have pegged technical support for the rupee at 80.00 a dollar.

For the rest of the day, the Indian unit is seen moving in the range of 79.7000-80.0000 a dollar. (Pratiksha)

India Rupee - Asia FX: Mixed; US FOMC meeting outcome in focus

MUMBAI – Asian currencies were mixed against the US dollar today as market participants avoided fresh bets ahead of the US Federal Open Market Committee's monetary policy meeting this week.

The two-day US Federal Open Market Committee meeting will start on Tuesday. The US central bank is expected to increase the interest rate by 75 basis points. The outcome of the US policy review will be keenly awaited after the European Central Bank raised interest rate by 50 basis points to 0% last week, which turned the focus of investors to an economic slowdown.

Fall in most Asian indices weighed on local currencies. Asian stocks were dragged down by concerns about global economic growth amid sharp interest rate hikes by developed economies.

At 1100 IST, the dollar index was at 106.74 compared with 106.73 on Friday.

Most units traded in a narrow range today and moved 0.1-0.2% against the US dollar.

The South Korean won, the Philippine peso, and Indonesian Rupiah gained 0.1-0.2%, while the Chinese yuan, Myanmar ringgit, and Thailand baht fell 0.1-0.2%. (Richard Fargose)

India Rupee: Largely steady on caution ahead of US FOMC meet outcome

NEW DELHI – The rupee was largely steady against the greenback today as traders exercised caution and avoided placing fresh bets ahead of the US Federal Open Market Committee's monetary policy meeting this week, dealers said.

The US central bank is expected to raise the interest rate by 75 basis points in its two-day policy meeting, which concludes on Wednesday. The outcome of the US policy meeting is keenly awaited after the European Central Bank hiked interest rate by 50 basis points to 0% last week, which turned the focus of investors towards an economic slowdown.

"Even though the 75-bps hike by the US Fed is mostly discounted, there is some amount of caution in the market," a dealer with a state-owned bank said. "We might see the rupee moving in a narrow range of 79.75-79.95 (a dollar) today."

A fall in domestic and Asian share indices dampened the sentiment for the Indian unit, dealers said. At 0925 IST, both the Nifty 50 and the Sensex traded 0.2% lower.

Dealers have pegged immediate technical support for the rupee at 80.00 a dollar.

For the rest of the day, the Indian unit is seen moving in the range of 79.7000-80.1000 a dollar. (Pratiksha)

India Rupee: Expected range for rupee - Jul 25

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 Shirsha Thakur

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