Informist, Friday, Jun 9, 2023

By Ananya Chaudhuri

NEW DELHI – The rupee ended higher against the dollar today as the dollar index fell after data showed unemployment benefit claims in the US rose more than expected, fuelling hopes that the US Federal Reserve may soon pause its aggressive rate hike cycle, dealers said. 

Further, banks sold the greenback on behalf of exporters which supported the local unit's upward movement, dealers said.

Today, after moving in a narrow range of 10 paise throughout the day, the rupee settled at 82.4625 against the greenback compared to 82.5625 a dollar on Thursday.

The Indian currency started the day higher against the greenback at 82.4800 as the dollar index declined after data from the US labor department showed that number of people filing for state unemployment benefits surged by 28,000 to a seasonally adjusted 261,000 for the week ended on Jun 3. The figure is also higher than a Reuters forecast of 235,000 claims for last week. 

The fed fund future traders are pricing in a 74.8% possibility of a pause in the Fed's meeting on Jun 13-14, according to CME FedWatch tool.

At 1622 IST, the dollar index, which measures the strength in the greenback against a basket of six major currencies, was at 103.56 as against 103.32 on Thursday. It was at 104.11 on Wednesday. The index fell as much as 103.29 during the day.

The Indian unit rose to the day's high of 82.4075 against the US unit as banks stepped in to sell dollars on behalf of exporters who expected the rupee to appreciate going forward, dealers said. "INR got strong, so selling (of dollars) pressure were there due to panic, but it (selling of dollars) wasn't much. Volumes were also less," a dealer at a state-owned bank said.

Dealer said volumes in the currency market were lacklustre today as most of the traders refrained from taking fresh positions due to lack of significant cues ahead of the outcome of the Fed meeting on Jun 14. Market participants are also waiting for US CPI data for May which is scheduled to be published on Jun 13. 

"Before (US) CPI, it (rupee) is likely to maintain this range. The CPI will decide the course even before FOMC (Federal Open Market Committee) meeting," a dealer at a state-owned bank said. "All the expectations get priced in after CPI data."

However, dealers said banks rushed to purchase dollars on behalf of importers who wanted to take advantage of relatively lower dollar/rupee level. This pushed the local unit to the day's low of 82.5025 against the greenback. 

Losses in domestic equity indices also limited gains for the Indian unit, dealers said. Today, both the benchmark Nifty 50 and Sensex ended 0.4% lower.

FORWARDS

Premiums on one-year dollar/rupee forward contracts rose tracking a fall in the US Treasury yields on Thursday, dealers said.

Yield on the benchmark 10-year US treasury note declined on Thursday after data from the US labor department showed unemployment benefit claims rose by 28,000 to 261,000 in the last week, against Reuters' poll projection of 235,000 claims. This increased bets for a pause in the Fed's aggressive rate hike cycle in the coming time.

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 146.50 paise as against 146.00 paise on Thursday. On an annualised basis, the premium was at 1.77% as against 1.76% at the previous close.

OUTLOOK

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

"Rupee is expected to be in a range of 82.30-82.70 (a dollar) on Monday as the market awaits for US Federal Reserve (policy outcome) on Jun 14 and European Central Bank (policy outcome) on Jun 15," Anil Kumar Bhansali head of treasury, executive director, Finrex Treasury Advisors LLP.

Dealers said market participants also await the US CPI which is due to be released on Tuesday.

Dealers have pegged the immediate key technical resistance for the rupee at 82.2000 a dollar. During the day, the rupee is seen at 82.20-82.60 a dollar.

India Rupee - World FX: Dollar index firm ahead of FOMC meet outcome

NEW DELHI – The dollar index remained firm as market participants wait for the US CPI data and the US Federal Reserve's policy decision next week for further cues about the central bank's rate hike cycle going forward. 

The US CPI data is scheduled to be released on Jun 13, while the outcome of the US Federal Reserve's two-day policy meeting is scheduled to be published on Jun 14. Going forward, these major two events will define the greenback's movement against major currencies across the globe.

The Fed fund future traders are pricing in a 74.8% possibility of a pause in the US Fed's upcoming policy review meeting on Jun 13-14, and 52.3% likelihood of a 25-basis-point rate hike in the July policy review meeting, according to CME FedWatch tool.

At 1437 IST, the dollar index, which measures the strength in the greenback against a basket of six major currencies, was at 103.55 as against 103.32 on Thursday. It was at 104.11 on Wednesday.

Both the euro and pound sterling were 0.2% lower against the US unit. (Ananya Chaudhuri)

India Rupee:In thin band amid low volumes on lack of significant cues

NEW DELHI – The rupee moved in a narrow range against the dollar today amid low volumes as traders avoided placing fresh bets due to the lack of significant cues ahead of the outcome of the US Federal Reserve's policy meeting next week, dealers said.

So far today, the rupee has moved in a tight range of 8 paise against the US currency. 

"From morning, its (rupee) in range only, not moving much. I think the market is not getting direction currently," a dealer at a state-owned bank said. "Next week, FOMC (Federal Open Market Committee) is there, that's the major event." The Federal Reserve's policy decision is scheduled on Jun 14.

Traders also await the US CPI data for May, due on Jun 13, which is expected to show that headline inflation continues to remain below core inflation.

Some banks sold the greenback at around the 82.46-a-dollar level for exporters who expected the rupee to appreciate from here on, dealers said. This supported the Indian unit.

A fall in local share indices limited the gains for the Indian currency, dealers said. At 1253 IST, both the benchmark Nifty 50 and Sensex were down 0.1%.

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

India Rupee: Rises as dollar index falls on upbeat US jobless data

NEW DELHI – The rupee rose against the dollar as the dollar index declined on Thursday after data showed unemployment benefit claims increased more than expected last week. This led to hope that the US Federal Reserve is unlikely to continue its aggressive rate-hike cycling moving forward, dealers said.

Data from the US labour department showed that number of people filing for state unemployment benefits surged by 28,000 to a seasonally adjusted 261,000 for the week ended on Jun 3, highest level since October 2021. The figure is also higher than Reuters' poll forecast of 235,000 claims for last week.

At 0930 IST, the dollar index, which measures the strength in the greenback against a basket of six major currencies, was at 103.39 as against 103.32 on Thursday. It was at 104.11 on Wednesday.

A rise in local share indices also supported the Indian unit, dealers said. At 0930 IST, both the Nifty 50 and Sensex were 0.1% up.

"It (rupee) opened up from yesterday's level, and there's likely to be outflows (of dollars) from the equities side, but when it'll hit the market not sure," a dealer at a state-owned bank said. 

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

India Rupee: Expected range for rupee - Jun 9

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

(Ananya Chaudhuri)

India Rupee - Asia FX:Up as dlr dn on more-than-expected jobless data

MUMBAI – Most Asian currencies were up against the dollar as the greenback weakened after a higher-than-expected jobless claims data gave way to hope of a softer monetary policy by the US Federal Reserve going ahead. 

Data from the US Labor Department showed that number of people filing for state unemployment benefits surged by 28,000 to a seasonally adjusted 261,000 for the week ended on Jun 3, highest level since October 2021. The figure is also higher than Reuters' poll forecast of 235,000 claims for last week.

According to the CME FedWatch tool, more than 75% of fed funds futures traders are now expecting a pause by the US Federal Reserve in its next policy meeting. 

At 0828 IST, the dollar index, which measures the strength in the greenback against a basket of six major currencies, was at 103.39 as against 103.40 on Thursday. It was at 104.11 on Wednesday.

The South Korean won led the losses and was down 0.6% against the dollar. The Indonesian rupiah and the Philippines peso were down 0.2% against the dollar. 

Bucking the trend, the offshore Chinese yuan was up 0.2% against the greenback.  (Kabir Sharma)

End

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

Edited by Aditya Sakorkar

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