Informist, Friday, Nov 3, 2023

By Pratiksha

NEW DELHI - The rupee touched its record low level of 83.29 a dollar, which it earlier hit on Wednesday, during the last leg of the trade today due to dollar purchases on behalf of importers and foreign portfolio investors, dealers said. 

However, the Indian currency ended just shy of the lifetime low as the Reserve Bank of India's persistent dollar sales kept the rupee from hitting a fresh record low, they said. 

"There's nothing new that happened. The same dollar demand by importers and RBI holding the range on the other end story took place," said a dealer with a big state-owned bank.

After moving in a tight range of 7 paise throughout the day, the rupee settled at 83.2850 a dollar. It had ended at 83.2425 a dollar on Thursday. 

The rupee started the day largely steady at 83.2300 a dollar, as the impact of a fall in the dollar index was neutralised by a rise in crude oil prices, dealers said. 

Crude oil prices rose as the conflict in West Asia showed signs of escalation after Israel announced that its forces had surrounded Gaza. Prices also rose as media reports said Saudi Arabia is expected to confirm its extension of crude supply cuts of 1 mln bpd in the days ahead. 

At 1645 IST, the January contract of Brent crude oil on the Intercontinental Exchange was at $86.65 a barrel, against $86.85 a bbl on Thursday. It was at $84.63 a bbl on Wednesday.

Meanwhile, the dollar index fell sharply after the US jobless claims rose higher-than-expected on Thursday. It weakened also due to market participants' view that the US Federal Reserve was done hiking rates.  

Data released on Thursday showed new claims for unemployment benefits in the US increased moderately last week. Initial claims for state unemployment benefits rose 5,000 to a seasonally adjusted 217,000 in the week ended Oct 28. A poll of economists by Reuters had forecast 210,000 claims.

At 1645 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 105.96, compared with 106.15 on Thursday. It was at 106.63 on Wednesday.  

Shortly after opening, banks stepped in to purchase dollars on behalf of oil and other importers, which weighed on the Indian unit, dealers said. Further, foreign banks purchased the US unit on behalf of foreign portfolio investors, who were looking to pull out funds from domestic markets, dealers said. This also kept the local unit under pressure. 

However, state-owned banks likely sold the greenback on behalf of the central bank, something they have been doing actively for the past few months, which kept the Indian currency supported, dealers said. 

"The sacrosanct 83.30 (a dollar) level was protected as usual. The market is just on wait and watch mode due to RBI's presence all the time," a dealer with a private bank said.

A rise in domestic share indices also gave support to the Indian unit, dealers said. The Sensex and the Nifty 50 ended 0.4% and 0.5% higher, respectively.    

As importers stepped up their dollar purchases during the last leg of the trade, the domestic currency touched its lifetime low of 83.29 a dollar during the last few minutes of the trade. 

FORWARDS

Premiums on the one-month dollar/rupee forward contract ended sharply lower today as banks sold dollars for forward delivery on concerns of a dollar shortage in the system, dealers said.

Premiums also fell as banks sold dollars for forward delivery, noting relatively lower levels, dealers said. 

Premiums on the one-month dollar/rupee forward have fallen sharply post the maturity of RBI's sell/buy swap of $5 bln on Oct 23. 

Premium on the one-month dollar/rupee contract was 4.93 paise, against 5.51 paise on Thursday. On an annualised basis, the premium was at 0.72%, against the previous close of 0.81%.

Premium on the one-year dollar/rupee forward contracts ended largely steady as traders await the US non-farm payrolls data due today for more cues on Fed's rate hike cycle.

Premium on the one-year, exact-period dollar/rupee forward contract was at 134.38 paise, against 135.97 on Thursday. On an annualised basis, the premium was at 1.61%, against the previous close of 1.63%.

OUTLOOK

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

Market participants now await key US economic data, including non-farm payrolls and services PMI for October, both due later today.

Dealers expect the Reserve Bank of India to continue selling dollars to prevent the rupee from a runaway depreciation.

They have pegged immediate technical support for the rupee at 83.30 a dollar and long-term support 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 dlr up on strong data; sterling dn

MUMBAI – The Australian dollar rose 0.5% against the greenback, on strong retail sales data in Jul-Sep. The country's retail sales, which measure the country’s consumer spending, rose 0.2% on quarter in Jul-Sep from a 0.6% drop in Apr-Jun, according to the data published by the Australian Bureau of Statistics today.

The Canadian dollar was steady against the US unit ahead of the release of the country's employment data for October, which is due later today, would show lower addition of jobs as compared to the previous month. Market participants expect Canada to have added 22,500 jobs in October as compared to 63,800 in September. They also expect the unemployment rate to rise to 5.6%, which would be the highest since January 2022.

The euro was almost steady against the dollar, as traders awaited the US non-farm payrolls report for further cues, after the US Federal Reserve maintained its benchmark rates steady.

The pound sterling weakened 0.1% against the dollar, as the Bank of England downgraded UK's growth forecast on Thursday while keeping the benchmark interest rates unchanged. Further, it warned that the Israel war could raise energy prices, and that inflation would not return to its target of 2% for two more years.

The higher-than-expected jobless claims data and the Fed's decision to hold its fed funds rate steady at 5.25-5.50% pulled the dollar index down from Thursday's high of 106.51 to 106.11 at 1426 IST today. The dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 106.15 on Thursday. It was at 106.63 on Wednesday.

Data released on Thursday showed the number of jobless claims for unemployment benefits in the US rose moderately last week. Initial claims for state unemployment benefits rose 5,000 to a seasonally adjusted 217,000 for the week ended Saturday. A Reuters poll of economists had forecast 210,000 claims for the week. 

Market participants now await key US economic data, including non-farm payrolls and services PMI for October, both due later today.  (Sourabh Kumar)

India Rupee:Likely dlr sales by RBI, importers' buys keep range thin

MUMBAI – The rupee moved in a narrow range of 5 paise so far as banks' dollar sales, likely on behalf of the Reserve Bank of India, offset the demand for dollars for importers and foreign fund outflows from domestic equities, dealers said.

Moreover, the dollar index fell further after data showed jobless claims in the US were higher than expected, which supported the rupee, dealers said. 

Data released on Thursday showed the number of claims for unemployment benefits in the US rose moderately last week. Initial claims for state unemployment benefits rose 5,000 to a seasonally adjusted 217,000 in the week ended Saturday. A poll of economists by Reuters had forecast 210,000 claims for the week. 

The Fed's decision to hold its benchmark rates steady at 5.25-5.50% and higher-than-expected jobless claims data pulled the dollar index down from a high of 106.51 on Thursday to 106.08 at 1333 IST today. The index, which measures the strength of the greenback against a basket of six major currencies, was at 106.15 on Thursday and 106.63 on Wednesday.

Further, crude oil futures rose as fresh reports from West Asia exacerbated investors' concerns about oil supply. Also, Nigeria's state oil firm NNPC Ltd is expected to supply 650,000 bpd more in December, Reuters reported.  

The price of Brent crude oil was $87.44 a bbl at 1333 IST, compared with o $86.65 a bbl on Thursday and $84.63 a bbl on Wednesday. Higher crude oil prices weigh on the Indian currency, as it increases India's import bills.

Dealers see immediate technical support for the rupee at 83.30 a dollar. During the day, the rupee is seen in the range of 83.00-83.30 a dollar.  (Vaishali Tyagi and Sourabh Kumar)

India Rupee - Asia FX: Most up as dlr dn on higher-than-view US data

MUMBAI – Most Asian currencies rose against the dollar as the greenback weakened after higher-than-expected US jobless claims data, which suggested the labour market in the country was easing, affirming investors' belief that the Federal Reserve may not hike rates going forward.

The higher-than-expected jobless claims data and the Fed's decision to hold its fed funds rate steady at 5.25-5.50% pulled the dollar index down from a high of 106.51 touched on Thursday to 106.10 at 1019 IST today. The dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 106.15 on Thursday. It was at 106.63 on Wednesday.

Data released on Thursday showed the number of jobless claims for unemployment benefits in the US rose moderately last week. Initial claims for state unemployment benefits rose 5,000 to a seasonally adjusted 217,000 for the week ended Saturday. A Reuters poll of economists had forecast 210,000 claims for the week. 

The Taiwan dollar rose 0.2% against the dollar as the country's central bank expressed concern about higher inflation going forward in the minutes of its September board meeting, released on Thursday. The bank raised the possibility of more rate hikes if inflation remains at a worrisome level.

The Malaysian ringgit rose 0.2% against the dollar. Bank Negara Malaysia, the central bank of Malaysia, kept its interest rate unchanged for the third straight meeting on Thursday. The bank's monetary policy committee decided to keep the overnight policy rate steady at 3%.

The Thai baht was up 0.5%. In a business seminar, Bank of Thailand's chief said he expected next year's economic growth to slow down from the forecast of 4.4% if the government's handout plan was reduced.

The South Korean won, Philippines peso, and Indonesian rupiah rose 1.6%, 0.7%, and 0.6%, respectively, against the dollar.  (Sourabh Kumar)

India Rupee: Steady; dlr dn on higher-than-expected US jobless data

MUMBAI - The rupee was steady against the dollar as the dollar index fell after data showed that jobless claims in the US rose more than expected, dealers said.

Data released on Thursday showed the number of claims for unemployment benefits in the US rose moderately last week. Initial claims for state unemployment benefits rose 5,000 to a seasonally adjusted 217,000 for the week ended Saturday. A Reuters poll of economists had forecast 210,000 claims for the week.

The dollar weakened on Thursday as investors assessed the outcome of the US Federal Open Market Committee's meeting, in which it decided to hold the Fed funds rate steady, dealers said. Slightly dovish remarks by Federal Reserve Chair Jerome Powell led to investors speculating that interest rates in the US may be near their peak, dealers said.

Further, the Bank of England in its monetary policy committee meeting on Thursday voted 6-3 to keep the bank rate at 5.25%, retaining its September decision to hold rates after 14 back-to-back increases.

Crude oil futures rose slightly on concerns over supply as the conflict in West Asia showed signs of escalation after Israel announced that its forces had surrounded Gaza. Saudi Arabia is also expected to confirm its extension of crude supply cuts of 1 mln bpd in the days ahead, a few analysts told Reuters. This supported the commodity too. Further, Nigeria's state oil firm NNPC Ltd is expected to supply 650,000 bpd more in December, Reuters reported.

Market participants now await key US economic data, including non-farm payrolls and services PMI for October, both due later today.

Dealers see immediate technical support for the rupee at 83.30 a dollar. During the day, the rupee is seen in the range of 83.00-83.30 a dollar. (Vaishali Tyagi)

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

(Vaishali Tyagi)

End

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

Edited by Vandana Hingorani

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 (11) 4220-1000

Send comments to feedback@informistmedia.com

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