Informist, Thursday, Mar 23, 2023

By Kabir Sharma

MUMBAI – The rupee ended sharply higher against the dollar today as the greenback slumped globally after the US Federal Open Market Committee hiked interest rates by 25 basis points. While the move was along expected lines, the central bank also hinted at softer policy tightening going ahead, dealers said.

The Indian currency settled 0.5% higher at 82.2625 a dollar today, its highest closing level in 10 days. Domestic money markets were shut Wednesday on account of Gudi Padwa.  

The Indian unit opened sharply higher at 82.3750 a dollar, tracking the dollar index, which fell to a seven-week low, as the Federal Reserve indicated that rate hikes were nearing an end.

"The committee will closely monitor incoming information and assess the implications for monetary policy," the FOMC said in a statement. All FOMC statements barring the latest one on Wednesday said "ongoing increases" in rates were likely to be appropriate. These words were unchanged since Mar 16, 2022, which saw the first hike of the current cycle.

The rupee gained further during the day as banks sold dollars on behalf of exporters who wanted to convert their dollar holdings accumulated over the quarter before closing their books, dealers said.

"There was continuous selling by exporters as they expect it (USD/INR) to go lower in the future, as comments from the Fed have hinted that it might be the peak rate," said a dealer with a big state-owned bank. 

The US FOMC raised the federal funds target range by 25 bps for the second straight meeting to 4.75-5.00%, opting to keep up its monetary policy tightening in spite of the much-publicised bank failures in the world's largest economy. Fed fund futures now imply only a 50% chance of one more hike in 2023. That's in contrast to Europe, where markets see another 50 bps hike.

Moreover, traders persistently sold the greenback to cut their long dollar bets, noting broad-based weakness in the US unit, which led to stop-losses being triggered on long dollar bets at around 82.30-82.20 a dollar, dealers said. Following this, the Indian currency jumped to the day's high of 82.07 a dollar. 

The dollar index fell to a fresh seven-week low in European trade, which provided further support to the domestic unit, dealers said. 

At 1709 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 102.38 as against 102.53 on Wednesday. It was at 103.22 on Tuesday. The index touched a seven-week low of 101.92 during the day. 

However, banks stepped in to purchase dollars on behalf of oil marketing companies and importers, who bought the greenback noting relatively lower dollar/rupee levels, which limited gains for the rupee, dealers said.

A fall in domestic equity indices also weighed on the rupee. The Nifty 50 and the Sensex ended 0.4% and 0.5% lower, respectively.

Some dealers also speculated that the Reserve Bank of India may have purchased the US unit around 82.10 a dollar, to replenish its foreign exchange reserves.

FORWARDS

The premium on the one-year dollar/rupee forward contract ended off highs, tracking an intraday rise in US Treasury yields, dealers said.

Earlier in the day, premiums rose to a high of 2.48% tracking a slump in US Treasury yields on Wednesday, dealers said. US Treasury yields fell earlier due to expectations that the key policy rate would peak soon, after the Fed delivered a 25-basis-point rate hike on Wednesday.

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

The premium on the one-year dollar/rupee contract was 199.63 paise, against 201.01 paise on Tuesday. On an annualised basis, the premium was at 2.42%, flat against the previous close.

OUTLOOK 

On Friday, the Indian unit will take cues from overnight movement in the dollar index after the outcome of Bank of England's monetary policy meeting.

"You will see dollar at the same level tomorrow, a 25 bps hike by the BOE is factored in. Oilers (oil marketing companies) will hold the pair at 82.20 (a dollar)," a dealer with a foreign bank said.   

Dealers said the Indian currency would also take cues from overnight movement in crude oil prices.

Dealers have pegged the next technical resistance for the rupee at 82.00 a dollar. The currency is expected to move in the range of 82.00-82.50 a dollar on Friday, they said.

India Rupee - World FX: Sterling up before BOE meeting; dlr still dn

MUMBAI – The pound sterling was up 0.3% against the dollar ahead of the Bank of England's monetary policy outcome, due later today. The Bank of England is expected to raise interest rates for the 11th time in a row today after a shocking inflation data dashed speculation that a pause was on the cards.

The Consumer Price Index increased by an annual 10.4%, above the 9.9% consensus forecast among economists in a Refinitiv poll, and was up from 10.1% in January. On a monthly basis, CPI inflation rose by 1.1%, exceeding a forecast of 0.6% rise.

The dollar was weak globally after US Federal Open Market Committee hiked interest rates by 25 basis points, which was on expected lines, but pointed to less policy tightening going ahead. 

At 1411 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 102.20 as against 102.53 on Wednesday. It was at 103.22 on Tuesday. The index touched a fresh seven-week low today.

The euro was up 0.4% against the dollar as European Central Bank Governing Council member Madis Muller said, "inflation is a bigger problem than the rise in borrowing costs." (Kabir Sharma)

India Rupee:Surges as traders cut long dlr bets, exporters sell dlrs

NEW DELHI – The rupee rose further against the greenback as the broad-based weakness in the US unit prompted traders to sell the greenback to cut existing long dollar bets, dealers said.

This led to stop losses being triggered on long dollar bets around 82.30-82.20 a dollar level, dealers said.

The dollar index slumped to a seven-week low after the US Federal Open Market Committee hiked interest rates by 25 basis points, on expected lines, but indicated towards a less policy tightening going ahead, dealers said. 

At 1147 IST, the dollar index, which measures the strength in the greenback against a basket of six major currencies, was at 102.06 as against 102.53 on Wednesday. It was at 103.22 on Tuesday. The index fell to a low of 102.04 earlier today. 

Moreover, banks sold dollars on behalf of exporters who wanted to convert their dollar holdings accumulated over the quarter before closing their books. This also provided support to the Indian unit, dealers said.

"Exporters have been selling (dollars) since morning," a dealer with a big state-owned bank said. "RBI should come to buy (dollars) around these levels as they have bought whenever rupee has moved towards 82.00 (a dollar) in the past."

However, some banks stepped in to purchase the greenback on behalf of importers who wanted to take advantage of relatively lower dollar/rupee levels, which limited gains for the Indian unit, dealers said.  

Some dealers speculated the Reserve Bank of India may have purchased the US unit around 82.10 a dollar, to replenish its foreign exchange reserves.  

Dealers have pegged the next technical resistance for the rupee at 82.00 a dollar. The rupee is expected to move in the range of 82.00-82.40 a dollar for the rest of the day, dealers said. (Pratiksha)

India Rupee: Surges as dlr slips on softer Fed policy tightening view

MUMBAI – The rupee was sharply up against the dollar as the greenback slumped globally after the US Federal Open Market Committee hiked interest rates by 25 basis points, which was on expected lines, but pointed to less policy tightening going ahead, dealers said. 

"It (USDINR) opened down tracking a weak dollar, once it stabilises around 82.30 level, importers will come in to buy," a dealer with a state-owned bank said.

The US FOMC raised the federal funds target range by 25 bps for the second straight meeting to 4.75-5.00%, opting to keep up its monetary policy tightening in spite of the much-publicised bank failures in the world's largest economy. 

The Fed, however, indicated that hikes are nearing an end. "The committee will closely monitor incoming information and assess the implications for monetary policy," the FOMC statement said. There is a shift in the tone from the previous statements, which said "ongoing increases" in rates will likely be appropriate. That language had been in every policy statement since Mar 16, 2022.

Fed fund futures imply only a 50% chance of one more hike in 2023. That's in contrast to Europe where markets see another 50 bps.

At 0855 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 102.13 as against 102.53 on Wednesday. It was at 103.22 on Tuesday. The index touched a seven-week low on Wednesday.

However, a fall in domestic share indices capped gains for the rupee, dealers said. At 0927, both the Nifty 50 and the Sensex were down 0.6%. 

Dealers have pegged the next technical resistance for the rupee at 82.25 a dollar. The rupee is expected to move in the range of 82.20-82.60 a dollar for the rest of the day, dealers said. (Kabir Sharma)

India Rupee - Asia FX: Most up as dollar slumps post Fed rate hike

MUMBAI – Most Asian currencies were sharply up against the dollar as the greenback fell sharply after the Federal Open Market Committee raised its interest rates on expected lines. 

The US FOMC raised the federal funds target range by 25 bps for the second straight meeting to 4.75-5.00%, opting to keep up its monetary policy tightening in spite of much-publicised bank failures in the world's largest economy. Fed fund futures imply only a 50% chance of one more hike. That’s in contrast to Europe where markets see another 50 bps.

At 0855 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 102.12 as against 102.53 on Wednesday. It was at 103.22 on Tuesday.

The South Korean won lead the gains and was up almost 2.3% against the dollar tracking a 2% rise in domestic share indices. 

The Taiwan dollar, the Malaysian ringgit and the offshore Chinese yuan were up 0.6-0.7% against the dollar. (Kabir Sharma)

India Rupee: Expected range for rupee - Mar 23

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

(Kabir Sharma)

End

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

Edited by Avishek Dutta

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

Informist Media Tel +91 (22) 6985-4000

Send comments to feedback@informistmedia.com

© Informist Media Pvt. Ltd. 2023. All rights reserved.

Informist, Thursday, Mar 23, 2023

By Kabir Sharma

MUMBAI – The rupee ended sharply higher against the dollar today as the greenback slumped globally after the US Federal Open Market Committee hiked interest rates by 25 basis points. While the move was along expected lines, the central bank also hinted at softer policy tightening going ahead, dealers said.

The Indian currency settled 0.5% higher at 82.2625 a dollar today, its highest closing level in 10 days. Domestic money markets were shut Wednesday on account of Gudi Padwa.  

The Indian unit opened sharply higher at 82.3750 a dollar, tracking the dollar index, which fell to a seven-week low, as the Federal Reserve indicated that rate hikes were nearing an end.

"The committee will closely monitor incoming information and assess the implications for monetary policy," the FOMC said in a statement. All FOMC statements barring the latest one on Wednesday said "ongoing increases" in rates were likely to be appropriate. These words were unchanged since Mar 16, 2022, which saw the first hike of the current cycle.

The rupee gained further during the day as banks sold dollars on behalf of exporters who wanted to convert their dollar holdings accumulated over the quarter before closing their books, dealers said.

"There was continuous selling by exporters as they expect it (USD/INR) to go lower in the future, as comments from the Fed have hinted that it might be the peak rate," said a dealer with a big state-owned bank. 

The US FOMC raised the federal funds target range by 25 bps for the second straight meeting to 4.75-5.00%, opting to keep up its monetary policy tightening in spite of the much-publicised bank failures in the world's largest economy. Fed fund futures now imply only a 50% chance of one more hike in 2023. That's in contrast to Europe, where markets see another 50 bps hike.

Moreover, traders persistently sold the greenback to cut their long dollar bets, noting broad-based weakness in the US unit, which led to stop-losses being triggered on long dollar bets at around 82.30-82.20 a dollar, dealers said. Following this, the Indian currency jumped to the day's high of 82.07 a dollar. 

The dollar index fell to a fresh seven-week low in European trade, which provided further support to the domestic unit, dealers said. 

At 1709 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 102.38 as against 102.53 on Wednesday. It was at 103.22 on Tuesday. The index touched a seven-week low of 101.92 during the day. 

However, banks stepped in to purchase dollars on behalf of oil marketing companies and importers, who bought the greenback noting relatively lower dollar/rupee levels, which limited gains for the rupee, dealers said.

A fall in domestic equity indices also weighed on the rupee. The Nifty 50 and the Sensex ended 0.4% and 0.5% lower, respectively.

Some dealers also speculated that the Reserve Bank of India may have purchased the US unit around 82.10 a dollar, to replenish its foreign exchange reserves.

FORWARDS

The premium on the one-year dollar/rupee forward contract ended off highs, tracking an intraday rise in US Treasury yields, dealers said.

Earlier in the day, premiums rose to a high of 2.48% tracking a slump in US Treasury yields on Wednesday, dealers said. US Treasury yields fell earlier due to expectations that the key policy rate would peak soon, after the Fed delivered a 25-basis-point rate hike on Wednesday.

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

The premium on the one-year dollar/rupee contract was 199.63 paise, against 201.01 paise on Tuesday. On an annualised basis, the premium was at 2.42%, flat against the previous close.

OUTLOOK 

On Friday, the Indian unit will take cues from overnight movement in the dollar index after the outcome of Bank of England's monetary policy meeting.

"You will see dollar at the same level tomorrow, a 25 bps hike by the BOE is factored in. Oilers (oil marketing companies) will hold the pair at 82.20 (a dollar)," a dealer with a foreign bank said.   

Dealers said the Indian currency would also take cues from overnight movement in crude oil prices.

Dealers have pegged the next technical resistance for the rupee at 82.00 a dollar. The currency is expected to move in the range of 82.00-82.50 a dollar on Friday, they said.

India Rupee - World FX: Sterling up before BOE meeting; dlr still dn

MUMBAI – The pound sterling was up 0.3% against the dollar ahead of the Bank of England's monetary policy outcome, due later today. The Bank of England is expected to raise interest rates for the 11th time in a row today after a shocking inflation data dashed speculation that a pause was on the cards.

The Consumer Price Index increased by an annual 10.4%, above the 9.9% consensus forecast among economists in a Refinitiv poll, and was up from 10.1% in January. On a monthly basis, CPI inflation rose by 1.1%, exceeding a forecast of 0.6% rise.

The dollar was weak globally after US Federal Open Market Committee hiked interest rates by 25 basis points, which was on expected lines, but pointed to less policy tightening going ahead. 

At 1411 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 102.20 as against 102.53 on Wednesday. It was at 103.22 on Tuesday. The index touched a fresh seven-week low today.

The euro was up 0.4% against the dollar as European Central Bank Governing Council member Madis Muller said, "inflation is a bigger problem than the rise in borrowing costs." (Kabir Sharma)

India Rupee:Surges as traders cut long dlr bets, exporters sell dlrs

NEW DELHI – The rupee rose further against the greenback as the broad-based weakness in the US unit prompted traders to sell the greenback to cut existing long dollar bets, dealers said.

This led to stop losses being triggered on long dollar bets around 82.30-82.20 a dollar level, dealers said.

The dollar index slumped to a seven-week low after the US Federal Open Market Committee hiked interest rates by 25 basis points, on expected lines, but indicated towards a less policy tightening going ahead, dealers said. 

At 1147 IST, the dollar index, which measures the strength in the greenback against a basket of six major currencies, was at 102.06 as against 102.53 on Wednesday. It was at 103.22 on Tuesday. The index fell to a low of 102.04 earlier today. 

Moreover, banks sold dollars on behalf of exporters who wanted to convert their dollar holdings accumulated over the quarter before closing their books. This also provided support to the Indian unit, dealers said.

"Exporters have been selling (dollars) since morning," a dealer with a big state-owned bank said. "RBI should come to buy (dollars) around these levels as they have bought whenever rupee has moved towards 82.00 (a dollar) in the past."

However, some banks stepped in to purchase the greenback on behalf of importers who wanted to take advantage of relatively lower dollar/rupee levels, which limited gains for the Indian unit, dealers said.  

Some dealers speculated the Reserve Bank of India may have purchased the US unit around 82.10 a dollar, to replenish its foreign exchange reserves.  

Dealers have pegged the next technical resistance for the rupee at 82.00 a dollar. The rupee is expected to move in the range of 82.00-82.40 a dollar for the rest of the day, dealers said. (Pratiksha)

India Rupee: Surges as dlr slips on softer Fed policy tightening view

MUMBAI – The rupee was sharply up against the dollar as the greenback slumped globally after the US Federal Open Market Committee hiked interest rates by 25 basis points, which was on expected lines, but pointed to less policy tightening going ahead, dealers said. 

"It (USDINR) opened down tracking a weak dollar, once it stabilises around 82.30 level, importers will come in to buy," a dealer with a state-owned bank said.

The US FOMC raised the federal funds target range by 25 bps for the second straight meeting to 4.75-5.00%, opting to keep up its monetary policy tightening in spite of the much-publicised bank failures in the world's largest economy. 

The Fed, however, indicated that hikes are nearing an end. "The committee will closely monitor incoming information and assess the implications for monetary policy," the FOMC statement said. There is a shift in the tone from the previous statements, which said "ongoing increases" in rates will likely be appropriate. That language had been in every policy statement since Mar 16, 2022.

Fed fund futures imply only a 50% chance of one more hike in 2023. That's in contrast to Europe where markets see another 50 bps.

At 0855 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 102.13 as against 102.53 on Wednesday. It was at 103.22 on Tuesday. The index touched a seven-week low on Wednesday.

However, a fall in domestic share indices capped gains for the rupee, dealers said. At 0927, both the Nifty 50 and the Sensex were down 0.6%. 

Dealers have pegged the next technical resistance for the rupee at 82.25 a dollar. The rupee is expected to move in the range of 82.20-82.60 a dollar for the rest of the day, dealers said. (Kabir Sharma)

India Rupee - Asia FX: Most up as dollar slumps post Fed rate hike

MUMBAI – Most Asian currencies were sharply up against the dollar as the greenback fell sharply after the Federal Open Market Committee raised its interest rates on expected lines. 

The US FOMC raised the federal funds target range by 25 bps for the second straight meeting to 4.75-5.00%, opting to keep up its monetary policy tightening in spite of much-publicised bank failures in the world's largest economy. Fed fund futures imply only a 50% chance of one more hike. That’s in contrast to Europe where markets see another 50 bps.

At 0855 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 102.12 as against 102.53 on Wednesday. It was at 103.22 on Tuesday.

The South Korean won lead the gains and was up almost 2.3% against the dollar tracking a 2% rise in domestic share indices. 

The Taiwan dollar, the Malaysian ringgit and the offshore Chinese yuan were up 0.6-0.7% against the dollar. (Kabir Sharma)

India Rupee: Expected range for rupee - Mar 23

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

(Kabir Sharma)

End

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

Edited by Avishek Dutta

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

Informist Media Tel +91 (22) 6985-4000

Send comments to feedback@informistmedia.com

© Informist Media Pvt. Ltd. 2023. All rights reserved.