Informist, Tuesday, Jun 13, 2023

By Aiswarya Santhosh

MUMBAI - After moving in a tight range throughout the day, the rupee ended slightly higher against the dollar as the greenback fell globally ahead of the release of the US CPI data, dealers said. 

Today, the Indian currency settled at 82.3675 against the greenback after moving in a thin range of 11 paise. The rupee had settled at 82.4300 a dollar on Monday.

The rupee opened largely steady at 82.4250 against the dollar as traders exercised caution ahead of the outcome of the US Federal Open Market Committee meeting, due Wednesday, and the US CPI data scheduled for release later today, dealers said. 

Traders largely expect the Federal Reserve to pause its rate hike cycle on Wednesday. According to CME Fedwatch tool, 72.3% traders believe the Fed will keep its rate unchanged in the 5-5.25% range, while the rest expect a 25-basis-point hike. 

Traders also await the US CPI data. Headline inflation is expected to decline to 4.1% on year in May from 4.9% in April, according to a Reuters' poll. 

Throughout the day, the Indian currency moved in a tight range as traders refrained from placing large bets ahead of key US data and Fed policy meet, dealers said. 

Around two hours into the trade, the rupee rose to the day's high of 82.3525 against the greenback due a sharp rise in the domestic share indices. The Nifty 50 and the Sensex ended 0.6% and 0.7% higher, respectively. 

Moreover, the dollar index fell during European trade, which also aided the Indian currency. 

At 1523 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 103.27 against 103.63 on Monday. It was at 103.55 on Friday.

"Today, rupee was range bound as all are eyeing US CPI, market is factoring in a pause by the Fed on Wednesday," said a dealer with a foreign bank. "Rupee rose to 82.35 levels due to rise in stocks as well due to favourable domestic CPI."

Data released on Monday showed India's CPI inflation print cooled to 4.25% in May from 4.70% the previous month, due to a fall in food, fuel, clothing and services prices.

However, dealers said that some banks bought dollars for oil marketing companies at the 82.35 a dollar level, which limited gains for the Indian unit. Dealers said oil marketing companies bought the greenback noting relatively lower crude oil prices and dollar/rupee levels.

An over 1% rise in crude oil prices during the day also limited gains for the Indian unit. Crude oil prices recovered partially after an over 3% fall on Monday due to concerns over demand growth and rising supply, dealers said. 

At 1531 IST, the July contract of Brent crude oil on the Intercontinental Exchange was at $73.02 a barrel, as against $71.84 a bbl on Monday. It was at $74.79 a bbl on Friday.

FORWARDS

Premiums on one-year dollar/rupee forward contracts ended largely steady on caution ahead of US CPI due today, dealers said.

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

The premium on the one-year contract was at 143.72 paise as against 144.27 paise on Monday. On an annualised basis, the premium was at 1.73% as against 1.75% at the previous close.

OUTLOOK

On Wednesday, the rupee will take cues from movement in the dollar index after the US CPI data, dealers said. It will also take cues from movement in crude oil prices, they said.

Market participants will also keenly eye US Fed policy meet that will start later today and the outcome is due late Wednesday.

"With expectation of US CPI at 4.10%, dollar is getting sold off against most currencies and with Brent crude prices also down, Indian rupee is in for a dream run with expectations of 82 soon. For tomorrow (Wednesday) expect rupee to be in a range of 82.20 to 82.50 and with FOMC on 14th should see some volatility on 15th," said Anil Kumar Bhansali, head of treasury, executive director, Finrex Treasury Advisors LLP.

Dealers have pegged the immediate key technical resistance for the rupee at 82.3000 a dollar. During the day, the rupee is seen at 82.20-82.60 a dollar.

India Rupee - World FX: Dollar index down as US CPI seen declining

NEW DELHI – The dollar index fell as traders await the US CPI number for May which is widely expected to show a decline in the headline inflation figure. Further, traders have raised bets on a pause in rate hikes at the US Federal Reserve's two-day policy review meeting which ends on Wednesday.

The US CPI is expected to fall to 4.1% on year in May, from 4.9% in April, according to economists polled by Reuters. The US Labor Department will release the inflation figures later today.

Moreover, Fed fund futures traders are factoring in a 75.8% probability of a pause in the US Federal Reserve's current rate hike cycle, according to the CME FedWatch tool. Both of these factors have weighed on the greenback.

At 1409 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 103.30 against 103.63 on Monday. It was at 103.55 on Friday.

The pound sterling rose 0.4% against the US currency after data showed that regular pay in the UK, leaving bonuses aside, rose 7.2% in three months to April, against the average rise of 6.9% forecast by economists in a Reuters poll. The unexpected rise in wages led to fears that the Bank of England would continue to raise interest rates.

The euro was also 0.4% up against the dollar as market participants expect the European Central Bank to raise benchmark interest rates by another quarter of a percentage point in its policy meeting on Thursday. (Ananya Chaudhuri)

India Rupee: Slightly up as dollar index down ahead of US CPI data

MUMBAI – Rupee rose slightly against the dollar as the dollar index fell ahead of the release of the US CPI data later today, dealers said. 

Headline inflation in the US is expected to decline to 4.1% on year in May from 4.9% in April, according to a poll by Reuters. Inflation data is crucial to determine the US Federal Reserve's monetary policy decision in its policy meeting which starts today and concludes on Wednesday. 

Market participants largely expect the Fed to pause its interest rate hikes in this meeting. According to the CME Fedwatch tool, 80.3% traders believe the Fed will keep its rate unchanged in the 5.00-5.25% range, while the rest expect a 25-basis-point hike. 

At 1257 IST, the dollar index, which measures the strength in the greenback against a basket of six major currencies, was at 103.31 as against 103.63 on Monday. It was at 103.55 on Friday.

A rise in the domestic share indices also aided the Indian currency. At 1305 IST, both the Nifty 50 and the Sensex rose 0.6%.

However, gains for the Indian unit was limited as banks bought the greenback for oil marketing companies at the 82.35 a dollar level, noting the relatively lower dollar/rupee levels, dealers said. 

"Rupee was range bound as market is awaiting US policy decision and CPI data," said a dealer with a big state-owned bank. "Most traders are holding their positions ahead of FOMC, but there was some buying (dollars) by oil companies." 

Rupee moved in a narrow range of only 11 paise so far as traders were cautious ahead of US Federal Reserve's monetary policy outcome, dealers noted. 

Dealers have pegged next technical resistance for the rupee at 82.30 a dollar. During the day, it is seen at 82.20-82.60 a dollar. (Aiswarya Santhosh)

India Rupee: Largely steady as traders await US CPI, FOMC outcome

MUMBAI – The rupee was largely steady against the dollar today as market participants remained cautious ahead of the US Federal Reserve's monetary policy outcome and US CPI data, dealers said. 

The Federal Open Market Committee's meeting will start today and the outcome is due Wednesday. Market participants largely expect the Fed to pause its interest rate hikes on Wednesday. According to the CME Fedwatch tool, 76.9% traders believe the Fed will keep its rate unchanged in the 5-5.25% range, while the rest expect a 25-basis-point hike. 

Traders also await the US inflation data for May, due today, which is crucial as policymakers may assess the data in the Federal Reserve's policy review meeting. Headline inflation in the US is expected to decline to 4.1% on year in May from 4.9% in April, according to a poll by Reuters. 

"Rupee is range bound only, it will likely be in this range until the Fed meet," said a dealer with a private bank. "I see a range of 82.40-82.60, there could be buying (dollars) at the 82.40 level."

A rise in the domestic share indices supported the Indian unit. At 0937 IST, both the Nifty 50 and the Sensex rose 0.5%. 

Meanwhile, a rise in crude oil prices due to demand growth concerns and rising supplies of the fuel, weighed on the Indian unit, dealers said. 

Dealers have pegged next technical resistance for the rupee at 82.40 a dollar. During the day, it is seen at 82.20-82.60 a dollar. (Aiswarya Santhosh)

India Rupee - Asia FX: Mixed ahead of US CPI, FOMC; China cuts rate

NEW DELHI – Asian currencies traded on a mixed note against the dollar due to caution ahead of key US CPI data release today, and the US Federal Reserve's policy decision this week.

Market participants expect the US headline inflation to fall to 4.1% on year in May, from 4.9% in April, according to a Reuters' poll. 

Moreover, investors are betting that the US Fed will likely to opt for a pause in rate hike at the end of its two-day policy review meeting on Wednesday. According to the CME Fedwatch tool, 80.2% traders believe the Federal Reserve will keep its rate unchanged, while the rest expect a 25-basis-point hike.

At 0809 IST, the dollar index, which measures the strength in the greenback against a basket of six major currencies, was at 103.53 as against 103.63 on Monday. It was at 103.55 on Friday.

The Chinese yuan fell 0.3% against the US currency after the People's Bank of China cut its seven-day reverse repurchase rate by 10 basis points to 1.9% from 2%, the first such move since August.

Both the Philippine peso and Indonesian rupiah were 0.1% against the US currency.

Bucking the trend, the South Korean won rose 0.4% against the greenback. (Ananya Chaudhuri)

India Rupee: Expected range for rupee - Jun 13

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

(Aiswarya Santosh)

End

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

Edited by Vandana Hingorani

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