Informist, Wednesday, Mar 9, 2022

By Pratiksha

NEW DELHI – The rupee ended sharply up against the dollar today tracking domestic share indices, which surged after risk sentiment among investors improved worldwide on expectations of the Russia-Ukraine conflict easing, said dealers.

Today, the Nifty 50 and Sensex ended nearly 2.1% and 2.3% higher, respectively.

"This amount of appreciation (in rupee) was long due, since the market was waiting for any small sign of improvement," said a dealer with a state-owned bank.

The rupee settled at 76.5600 a dollar today against 76.9050 a dollar at 1530 IST on Tuesday. The local currency rose nearly 0.5% against the US unit today. 

Risk sentiment improved globally after Russian foreign ministry spokesperson Maria Zakharova said today that Russia will achieve its aim of ensuring Ukraine's neutral status and would prefer to do so through talks, said dealers.

"Moscow's aims do not include overthrowing the Kyiv government, and it hopes to achieve more significant progress in the next round of talks with Ukraine," Zakharova said in a briefing.

Reports that Ukraine is no longer insisting on NATO membership also raised hopes of de-escalation in conflict with Russia ahead of talks between foreign ministers of the two countries on Thursday.

Moreover, the dollar index came off earlier highs and fell in European trade after the euro bounced back from 22-month lows, lifted in part by expectations that the eurozone will increase fiscal spending to help offset the economic effects of Russia's invasion of Ukraine. 

This prompted some banks to sell dollars, on behalf of traders, who wanted to cover their existing bets placed in favour of the US unit. This, in turn, pushed the rupee to the day's high of 76.5525 a dollar, dealers said.  

At 1656 IST, the dollar index, which measures the strength in the US currency against a basket of six major currencies, was at 98.60, against 99.06 on Tuesday. It was at 99.29 on Monday.

Earlier in the day, some state-owned banks had stepped in to sell dollars on behalf of exporters at relatively higher dollar/rupee levels, which also provided support to the Indian currency, said dealers.

On the flip side, the rupee was weighed down as a large state-owned bank persistently purchased dollars on behalf of oil marketing companies, which noted sharply elevated Brent crude prices, said dealers.

Brent crude prices surged beyond $130 per barrel after the US announced a ban on Russian oil imports and the UK said it will phase them out by the end of the year, dealers said.

However, oil prices eased and moved towards $126 per bbl during the later part of the session after market sentiment improved on hopes of alleviating Russia-Ukraine conflict, reports said.  

At 1656 IST, the May contract of Brent crude on the Intercontinental Exchange was at $125.75 per bbl, against the previous close of $127.98 per bbl. Prices had risen to as much as $131.64 per bbl earlier today.

The Indian currency fell to the day's low at 76.8725 a dollar today. 

The rupee moved in a tight range of 76.7500-76.8500 a dollar during most of the trading session, as some banks' persistent dollar sales on behalf of exporters were offset by state-owned banks' dollar purchases for oil importers, according to dealers.

"The market sentiment was a lot better today, the only negative factor for the rupee was the rising oil prices," said a dealer with a state-owned bank.

FORWARDS

Premium on the dollar/rupee forwards contract fell today as banks sold forward dollar contracts on behalf of exporters, dealers said.

On an annualised basis, the premium on the one-year, exact-period dollar/rupee contract was at 4.13%, against 4.17% on Tuesday. The premium was 317.95 paise compared with 320.54 paise on Tuesday.

OUTLOOK

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

"I think this (upward) momentum will continue for the next few days," said the dealer with a state-owned bank. "I am expecting it (rupee) to move in a range of 76.30-76.85 (a dollar)."

Dealers have now pegged strong key technical support for the rupee at 76.80 a dollar.

During the day, the rupee is seen in 76.4000-76.9000 a dollar range.

India Rupee - World FX: Euro surges on hope of Ukraine crisis easing

MUMBAI – After suffering heavy losses recently, the euro rebounded nearly 0.8% against the US dollar today on improvement in risk sentiment following reports that Russia's foreign minister favours a diplomatic solution to the ongoing Russia-Ukraine conflict.

Reports that Ukraine is no longer insisting on NATO membership also raised hopes of de-escalation in conflict with Russia ahead of talks between foreign ministers of the two countries on Thursday.

The euro edged up against the dollar also after Europe refrained from joining the US and UK in imposing sanctions on imports of Russian oil and energy products.

As a consequence, the safe-haven dollar fell sharply in European trade and at 1543 IST, the dollar index, which measures the strength of the US currency against a basket of six major currencies, was at 98.60, against 99.06 on Tuesday. It was at 99.29 on Monday.

Investors are now keenly waiting for the European Central Bank's policy decision on Thursday. Market participants expect it to defer interest rate hikes until late in 2022.

Commodity-linked currencies such as the Australian dollar and the New Zealand dollar also rose sharply by 1% and 0.9% against the US dollar, respectively. (Arushi Jain)

India Rupee: Up as banks sell dlr for exporters, domestic shares rise

NEW DELHI – The rupee rose against the dollar today because some banks stepped in to sell the greenback on behalf of exporters at relatively higher dollar/rupee levels, said dealers.

Moreover, domestic and Asian share indices rose today, rebounding from losses incurred earlier in the week, which further provided support to the Indian rupee, dealers said. Investors continued to assess the potential economic impact of the ongoing Russia-Ukraine war. 

At 1052 IST, the Nifty 50 and Sensex were 0.9% and 1% higher, respectively. 

On the flip side, Brent crude prices surged beyond $130 per barrel after the US announced a ban on Russian oil imports and the UK said it will phase them out by the end of the year, which weighed on sentiment for the Indian unit, said dealers. 

At 1052 IST, the May contract of Brent crude on the Intercontinental Exchange was at $130.83 per bbl, against the previous close of $127.98 per bbl.

"I think gains in the rupee will be limited to 76.75 (a dollar) level since we are expecting buying (of dollars) from oil importers later in the day," said a dealer with a state-owned bank. 

For the rest of the day, the rupee is seen at 76.6000-76.9500 a dollar.  (Pratiksha)

India Rupee - Asia FX: Tad up; dlr firm as Ukraine crisis continues

MUMBAI – Asian currencies rose slightly against the dollar today tracking share indices across Asia that gained in early trade, recovering partially from losses earlier in the week as investors continued to assess the economic impact of the ongoing Russia's war on Ukraine.

The Indonesian rupiah and the Thai baht rose nearly 0.1% against the dollar today.

The dollar index remained elevated globally due to safe-haven demand as investors weighed the effect of sharply elevated oil prices on global economic growth amid the ongoing Russia-Ukraine war. 

Oil prices settled sharply higher on Tuesday as the US banned Russian oil imports and the UK said it will phase them out by year-end.

At 0937 IST, the dollar index, which measures the strength in the US currency against a basket of six major currencies, was at 99.04, against 99.06 on Tuesday. It was at 99.29 on Monday.

Meanwhile, the Chinese yuan and the Malaysian ringgit were largely steady against the US unit.

Markets in South Korea will be closed today on account of the country’s presidential election. (Arushi Jain)

India Rupee: Expected range for rupee - Mar 9

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 Pranav S. Joshi

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