Informist, Friday, Mar 11, 2022

By Pratiksha

NEW DELHI – The rupee settled sharply lower against the dollar today because the US unit strengthened further in European trade after data released on Thursday showed inflation in the US rose to the highest in 40 years, dealers said.

After moving in a broad range of nearly 44 paise through the day, the rupee settled at 76.5900 a dollar. It had closed at 76.3050 a dollar at 1530 IST on Thursday.

Inflation in the US rose to 7.9% from a year earlier, well above the US Federal Reserve's target of 2%, data from the Labor Department showed. The sharply elevated CPI print in the world's largest economy led market participants to expect an interest hike of at least 25 basis points by the Fed at its policy meeting on Wednesday.

At 1656 IST, the dollar index, which measures the strength in the US currency against a basket of six major currencies, was at 98.65, against 98.51 on Thursday. It was at 97.97 on Wednesday.

The index had risen to as much as 98.81 earlier today.

Dealers said a big state-owned bank persistently purchased the dollar on behalf of a large domestic company for overseas outflows, which further dampened sentiment for the Indian unit. 

"The rupee depreciated considerably after there was buying (of dollars) near the 76.40 (a dollar) level for (foreign fund) outflows."

Moreover, some banks also stepped in to purchase dollars on behalf of oil marketing companies, which noted sharply elevated Brent crude prices near $113 per barrel, further weighing on the Indian currency, dealers said.

Prices of crude oil recovered and rose today after high-level talks between Russian Foreign Minister Sergei Lavrov and his Ukrainian counterpart Dmytro Kuleba on Thursday failed to yield any breakthrough, according to reports.

Oil prices had settled about 2% lower on Thursday after a volatile session, as Russia pledged to fulfil contractual obligations and some traders said concerns around supply disruptions were overdone, as per reports.

At 1656 IST, the May contract of Brent crude on the Intercontinental Exchange was at $113.63 per bbl, against the previous close of $109.33 per bbl.

The Indian rupee had fallen to as much as 76.7100 a dollar today. 

Dealers said further losses in the local currency were prevented as some banks stepped in to sell dollars on behalf of exporters, who wanted to take advantage of relatively higher dollar/rupee levels of around 76.60-76.70 a dollar.

A recovery in the domestic equity indices also provided some support to the Indian currency, said dealers. The Nifty 50 and the Sensex ended nearly 0.2% higher each.

The Indian unit rose to the day's high of 76.2725 a dollar today. 

FORWARDS

The premium on the dollar/rupee forwards contract rose slightly today as banks bought forward dollar contracts on behalf of importers, dealers said.

On an annualised basis, the premium on the one-year, exact-period dollar/rupee contract was at 4.09%, flat against Thursday. The premium was 313.05 paise, compared with 312.25 paise on Thursday.

OUTLOOK

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

"I think we should expect volatility in the rupee next week as well," said a dealer with a state-owned bank. "Traders will keep an eye on news related to the Russia-Ukraine war."

Dealers have now pegged strong key technical resistance for the rupee at 76.30 a dollar.

During the day, the rupee is seen in range of 76.2000-76.8000 a dollar.

India Rupee - World FX: Most units fall; dollar up as US CPI surges

MUMBAI – Most major currencies fell against the dollar today because the dollar index rose further in European trade after US inflation data for February, released on Thursday, showed the largest annual increase since January 1982.

Inflation in the US surged 7.9% from a year earlier, well above the US Federal Reserve's target of 2%, data from the Labor Department showed on Thursday.

The sharply elevated CPI print in the world's largest economy led market participants to expect an interest hike of at least 25 basis points by the US Federal Reserve at its policy meeting on Wednesday.

At 1520 IST, the dollar index, which measures the strength in the US currency against a basket of six major currencies, was at 98.77, against 98.51 on Thursday. It was at 97.97 on Wednesday.

Meanwhile, the euro fell nearly 0.2% against the dollar today following the European Central Bank's decision to keep interest rates steady, while remaining cautious as it assesses the economic fallout from Russia’s invasion of Ukraine.

However, the central bank surprised markets on Thursday by announcing that it will wind down asset purchases faster than planned, before adding that it stands ready to revisit this decision if the outlook changes.

Commodity-linked currencies such as the Australian dollar and the New Zealand dollar also fell nearly 0.5% and 0.1%, respectively, against the US dollar.  (Arushi Jain)

India Rupee: Slumps on dlr purchases by large domestic co, oil cos

NEW DELHI – The rupee fell sharply against the dollar because of persistent greenback purchases by a large state-owned bank on behalf of a large domestic company for overseas outflows, said dealers.

Moreover, some banks continued to purchase dollars on behalf of oil marketing companies as Brent crude price remained firm around $111 a barrel, which further weighed on the Indian currency, said dealers.

After falling on Thursday, crude oil prices recovered today with Russia pledging to fulfil contractual obligations on energy supply and on the belief that concerns over supply disruption were overdone.

At 1425 IST, the May contract of Brent crude on the Intercontinental Exchange was at $111.57 per bbl, against the previous close of $109.33 per bbl. Prices had risen to as much as $112.66 per bbl earlier in the day.

Recovery in domestic share indices provided some support to the Indian currency, said dealers.

At 1425 IST, the Nifty 50 and Sensex were up nearly 0.2% each.

For the rest of the day, the rupee is seen at 76.2000-76.8000 a dollar.  (Pratiksha and Arushi Jain)

India Rupee: Down as high US CPI may lead to rate hikes by Fed

NEW DELHI – The rupee fell against the dollar today because the greenback rose against other major currencies after US inflation data for February, released on Thursday, showed the largest annual increase since January 1982, said dealers.

Inflation in the US surged 7.9% from a year earlier, well above the US Federal Reserve's target of 2%, data from the Labor Department showed.

This led market participants to expect an interest hike by the Fed at its policy meeting on Wednesday, which weighed on sentiment for riskier assets, including the rupee, according to dealers.

At 1105 IST, the dollar index, which measures the strength in the US currency against a basket of six major currencies, was at 98.57, against 98.51 on Thursday. It was at 97.97 on Wednesday.

Moreover, risk appetite among investors remained weak worldwide as talks between Russia and Ukraine's foreign ministers yielded no results. This further weighed on the Indian unit, said dealers.

"The rupee can probably add minor gains tracking lower crude prices but fact that the dollar index has gained momentum backed by higher inflation numbers should restrict the gains and prevent it from closing in on the 76 (per dollar) mark," said a dealer with a brokerage firm. 

Crude oil prices settled lower on Thursday as Russia pledged to fulfil contractual obligations and some traders said concerns over supply disruption were overdone, as per reports.

At 1105 IST, the May contract of Brent crude on the Intercontinental Exchange was at $109.27 per barrel, against the previous close of $109.33 per bbl. Prices had risen to as much as $118.36 per bbl on Thursday.

Dealers have now pegged immediate key technical support for the rupee at 76.50 a dollar.

For the rest of the day, the rupee is seen at 76.1000-76.6000 a dollar.  (Arushi Jain and Pratiksha)

India Rupee: Expected range for rupee - Mar 11

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

(Pratiksha)

End

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

Edited by Avishek Dutta

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