Informist, Wednesday, Nov 29, 2023

By Vaishali Tyagi and Sourabh Kumar

MUMBAI – The rupee ended steady against the dollar today as banks' dollar buys for oil marketing companies offset the positive impact of a weak greenback, dealers said.

After moving in a narrow range of 6 paise throughout the day, the rupee settled at 83.3250 a dollar today, against Tuesday's close of 83.3325 a dollar.

Today, the rupee opened a tad higher against the greenback as the dollar index slumped to an over three-month low following comments by US Federal Reserve Governor Christopher Waller, which hinted at a possible rate cut in the coming months.

Waller, who is generally considered very hawkish, said there was no reason to keep rates high. "Inflation rates are moving along pretty much like I thought," Waller told the American Enterprise Institute on Tuesday.

If the decline in inflation continues "for several more months ... three months, four months, five months...we could start lowering the policy rate just because inflation is lower", he said. "It has nothing to do with trying to save the economy. It is consistent with every policy rule. There is no reason to say we will keep it really high."

Post the comments, the dollar index fell to its lowest level since mid-August. At 0932 IST, the index, which measures the strength of the greenback against a basket of six major currencies, was at 102.63. It was 102.72 on Tuesday, and 103.20 on Monday. 

After the rupee appreciated against the greenback during early trade hours till around 1030 IST, banks stepped in to buy dollars on behalf of oil marketing companies, dealers said. Demand for the greenback from oil marketing companies came in as crude oil prices saw a slight rebound ahead of a meeting of the Organization of the Petroleum Exporting Countries and its allies on Thursday. The organisation will meet to discuss extension of output cuts going into the next year.

Crude oil prices were also affected after a severe storm in the Black Sea region disrupted up to 2 mln barrels per day of oil exports from Kazakhstan and Russia, according to state officials and port agent data.

In the second half of the day, the market mostly saw heavy demand for dollars by oil marketing companies.

At 1628 IST, the January contract of Brent crude oil was at $82.69 a bbl, compared to $81.68 a bbl on Tuesday. It was at $79.98 on Monday. 

Investors now await US GDP figures for Jul-Sep, due later today, and the personal consumption expenditures price index on Thursday, which is the Fed's preferred inflation gauge.

More importantly, seeing how the market reacted to Christopher Waller's speech, market participants now eye a speech by Federal Reserve Chair Jerome Powell on Friday.

FORWARDS

Premiums on one-year dollar/rupee forwards fell to their lowest level in over 15 years as foreign banks persistently sold dollars for forward delivery, dealers said.

Dealers said foreign banks sold dollars for forward delivery for the funding needs of their overseas branches ahead of the end of the calendar year.

US Treasury yields fell after comments by US Federal Reserve Governor Christopher Waller suggested that policy rate cuts might be on the horizon.

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

The premium on the one-year, exact-period dollar/rupee forward contract was at 125.11 paise, against 127.34 paise on Tuesday. On an annualised basis, the premium was at 1.50%, against the previous close of 1.52%.

OUTLOOK

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

Dealers expect the RBI to continue selling dollars to prevent the rupee from runaway depreciation.

Dealers have pegged key technical support for the local currency at 83.50 a dollar. During the day, the rupee is seen in the range of 83.10-83.50 a dollar.

India Rupee - World FX: Australian dollar down post weak CPI data

MUMBAI – The Australian dollar weakened 0.2% against the dollar as Australia's inflation fell more than expected in October and core inflation also eased, which resulted in scaling down of expectations of another hike in interest rates.

According to data from the Australian Bureau of Statistics, the country's monthly consumer price index rose 4.9% on year in October, down from 5.6% the previous month and below the market forecast of 5.2%.

The Japanese yen rose 0.2% against the dollar, even after Bank of Japan's board member Seiji Adachi's less hawkish remarks. 

The Swiss franc rose 0.2% against the US unit as the dollar index slumped to an over three-month low on the back of comments by US Federal Reserve Governor Christopher Waller, which hinted at a possible rate cut in the coming months.

Waller, generally considered very hawkish, said there was no reason to keep rates high. "Inflation rates are moving along pretty much like I thought," Waller told the American Enterprise Institute on Tuesday.

At 1511 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 102.81. It was 102.72 on Tuesday, and 103.20 on Monday.

The Canadian dollar remained largely flat against the greenback. The pound sterling and the euro fell 0.1% against the US currency.  (Vaishali Tyagi)

India Rupee: Premiums hit 15-yr low as bks sell dlrs for fwd delivery

NEW DELHI – Despite a decline in US Treasury yields, premiums on one-year dollar/rupee forwards fell to their lowest level in over 15 years as foreign banks persistently sold dollars for forward delivery, dealers said.

Dealers said foreign banks sold dollars for forward delivery for the funding needs of their overseas branches ahead of the end of the calendar year.

"There is a lot of receiving in the market, foreign banks are there. They are trying to meet their overseas demand," said a dealer with a state-owned bank. "Most of the action is in the near tenures, which is putting pressure on the long-tenure premiums."

At 1430 IST, the premium on the one-month dollar/rupee contract was 4.13 paise, against 4.97 paise on Tuesday. On an annualised basis, the premium was at 0.57%, against the previous close of 0.65%.

Premiums on one-year dollar/rupee forwards had risen to 1.54% earlier today, tracking a fall in the US Treasury yields, but the upward move was short-lived on account of foreign banks' dollar sales for forward delivery, dealers said.

US yields fell as comments by US Federal Reserve Governor Christopher Waller suggested that policy rate cuts were on the horizon. Premiums on forwards of a currency pair are reflective of the interest rate differential between the two countries.

"Usually, we see such receiving in the last few weeks of the year, but I think we are seeing it early this time," said a dealer with a private bank. "There are also outflows around this time, which are pressuring the premiums."

Market participants expect importers to buy dollars for forward delivery seeing the fall in levels. They now see strong technical support for the one-year forward premium at 1.45%.

At 1430 IST, the premium on the one-year, exact-period dollar/rupee forward contract was at 125.10 paise, against 127.34 paise on Tuesday. On an annualised basis, the premium was at 1.49%, against the previous close of 1.52%.  (Pratiksha)

India Rupee: Steady as bks' dollar buys for oil cos offset weak dlr

MUMBAI – The rupee was steady against the dollar today, as banks' dollar buys for oil marketing companies offset the impact of a weak greenback, dealers said.

The dollar index today fell to its lowest level in over three months. The fall can be attributed to remarks by US Federal Reserve Governor Christopher Waller, which suggested the possibility of future rate cuts.

"There was some selling (of dollars) in the market in the morning. Oil bids are aggressively there; we were expecting some outflows from Zomato as well," a dealer with a state-owned bank said. There were expectation of possible outflows from Zomato after reports said that Ant Group's payments platform Alipay likely sold its shares in the company worth $395 mln through a block deal.

The dollar index plummeted after Waller, seen as a hawkish policymaker, said that if inflation continues to ease "for several more months ... three months, four months, five months ... we could start lowering the policy rate just because inflation is lower." 

However, the slump in the dollar index did not have the expected impact on the Indian unit, dealers said.

"It (dollar/rupee) opened lower today, but couldn't sustain these levels. Buying (of dollars) came in early trading hours. But I don't think we are actually tracking global markets, so we should stop looking at them," a dealer at a private bank said.

Following Waller's remarks, around 42% of traders now expect the first rate-cut in the world's largest economy by March, as against around 25% of traders in the previous week, according to the CME Group's FedWatch Tool. The traders seemed to have taken more cues from his speech than some economic data from the country, which indicated that the economy is not yet easing.

At 1322 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 102.76. It was 102.72 on Tuesday, and 103.20 on Monday.

A rise in crude oil prices further weighed on the rupee. Crude prices went up on the possibility that the Organization of the Petroleum Exporting Countries and its allies are likely to deepen supply cuts into next year at its upcoming meeting on Thursday.

Crude prices were also seen up after a severe storm in the Black Sea region disrupted up to 2 mln barrels per day of oil exports from Kazakhstan and Russia, according to state officials and port agent data.

At 1330 IST, the price for the January contract of Brent crude oil on the Intercontinental Exchange was $81.60 a bbl against $81.68 a bbl on Tuesday. It was $79.98 a bbl on Monday.

Investors now await the US Jul-Sep GDP figures, due later today, and the personal consumption expenditures price index, which is the Fed's preferred inflation gauge, due Thursday.

For the rest of the day, the rupee is seen in a range of 83.10-83.40 against the dollar. Immediate key technical support is pegged at 83.50 a dollar.  (Vaishali Tyagi)

India Rupee: Up as dlr at over 3-mo low post Fed officials' remarks

MUMBAI – The rupee was up against the dollar today as the dollar index slumped to an over three-month low on the back of comments by US Federal Reserve Governor Christopher Waller's hinting at a possible rate cut in the coming months, dealers said.

Waller, who is generally considered very hawkish, said there is no reason to keep rates high. "Inflation rates are moving along pretty much like I thought," Waller told the American Enterprise Institute think tank on Tuesday.

If the decline in inflation continues "for several more months ... three months, four months, five months...we could start lowering the policy rate just because inflation is lower," he said. "It has nothing to do with trying to save the economy. It is consistent with every policy rule. There is no reason to say we will keep it really high."

Post the comments, the dollar index fell to its lowest level since mid-August. At 0932 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 102.63. It was 102.72 on Tuesday, and 103.20 on Monday. 

Some dealers said banks bought the greenback on behalf of oil marketing companies and other importers, which weighed on the Indian unit.

"Persistent dollar demand from importers could keep gains capped for the local unit," said Sriram Iyer, senior research analyst, Reliance Securities. "Most Asian peers have started with gains and in the early morning session and FPI (foreign portfolio investors) inflows into the domestic equity markets will aid sentiments for the local unit," he said. 

A recovery in crude oil prices on caution ahead of the meeting of the Organization of the Petroleum Exporting Countries and its allies may also weigh on the rupee, dealers said. The organisation is scheduled to meet on Thursday to discuss extension of output cuts going into the next year.

A rise in crude oil prices increases India's import bill, which in turn weighs on the currency. 

Crude prices were also affected after a severe storm in the Black Sea region disrupted up to 2 mln barrels per day of oil exports from Kazakhstan and Russia, according to state officials and port agent data.

At 0939 IST, the January contract of Brent crude oil was at $81.68 a bbl unchanged from the previous close. It was at $79.98 on Monday.  

However, some foreign banks sold the greenback for foreign fund inflows into domestic equities, which supported the rupee, they said. At 0942 IST, the Nifty 50 and the Sensex were up 0.6% each.

Investors now await the US Jul-Sep GDP figures, due later today, and the personal consumption expenditures price index, due Thursday, which is the Fed's preferred inflation gauge.

More importantly, seeing how the market reacted to Christopher Waller's speech, market participants now eye a speech by Federal Reserve Chair Jerome Powell on Friday.

Dealers see immediate key technical support for the rupee at 83.50 a dollar. The rupee is seen at 83.10-83.40 against the dollar during the day. (Kabir Sharma)

India Rupee: Expected range for rupee - Nov 29

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

(Sourabh Kumar)

India Rupee - Asia FX: Up as dollar slumps post Fed comments

MUMBAI – Asian currencies surged against the dollar today as the dollar index slumped to its lowest level since mid-August, after US Federal Reserve Governor Christopher Waller, who is generally considered very hawkish, said there is no reason to keep rates high, fuelling hopes of a rate cut.   

"Inflation rates are moving along pretty much like I thought," Waller told the American Enterprise Institute think tank on Tuesday.

If the decline in inflation continues "for several more months ... three months, four months, five months ... we could start lowering the policy rate just because inflation is lower," he said. "It has nothing to do with trying to save the economy. It is consistent with every policy rule. There is no reason to say we will keep it really high."

Further, Chicago Fed President Austan Goolsbee also talked about the harmful effects of keeping rates higher for longer.  

"Once you believe that you are on the path to getting inflation to target, then the amount of restrictiveness that you need to apply needs to be less," he said in an interview Tuesday with Marketplace. "Anybody who cooks a turkey knows that you've got to pull it out of the oven before it's to the point where you want it to be, because it's going to have residual heat."

US rate futures are pricing in a 33% chance of a rate cut in March, rising to a roughly 65% probability in May, according to the CME's FedWatch tool. Those odds were at 21% and roughly 50% late on Monday.

At 0811 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 102.55. It was 102.72 on Tuesday, and 103.20 on Monday. It fell to an over three-month low of 102.47 earlier today. 

Market participants now await the US core personal consumption expenditures price index - the Fed's preferred measure of inflation - for further cues on the central bank's monetary policy path.

The Malaysian ringgit rose 0.6% against the dollar. The Taiwan dollar rose 0.5% against the greenback.  

The South Korean won and the Indonesian rupiah also rose 0.5% each against the dollar.  (Kabir Sharma) 

End

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

Edited by Avishek Dutta

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