Informist, Wednesday, May 24, 2023

By Aiswarya Santhosh

MUMBAI – The rupee ended higher against the dollar today as banks persistently sold the greenback for foreign fund inflows and for exporters, dealers said. 

After trading in a range of 19 paise through the day, the Indian unit settled at 82.6600 against the greenback, compared to 82.7950 a dollar on Tuesday.

The rupee opened slightly lower against the dollar today as the dollar index neared a two-month high on safe-haven demand as investors' risk sentiment was hurt due to lack of progress in the US debt ceiling negotiations, dealers said. 

On Tuesday, US President Joe Biden and Congressional leaders continued their talks on the debt ceiling issue but yet again ended the discussion with no agreement, raising concerns of a potential US default as the Jun 1 deadline draws near. 

Meanwhile, data on Tuesday showed that sales of single-family homes in the US rose to a 13-month high last month. Moreover, the headline S&P Global Flash US PMI Composite Output Index rose to 54.5 in May, as against 53.4 in April, indicating a fast growth in the private sector business activity. 

Market participants now await the minutes of the Federal Open Market Committee meeting held on May 2-3, due later today, for cues on the Federal Reserve's future monetary policy decisions. 

At 1506 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 103.53, as against 103.48 on Tuesday. It was at 103.20 on Monday. 

Soon after opening, the rupee rose against the dollar as banks sold the greenback for foreign fund inflows, dealers said. They added that banks sold the greenback for exporters noting the higher dollar/rupee levels. 

Gradually, towards the last leg of trade, the rupee rose to the day's high of 82.6425 a dollar as banks persistently sold dollars for foreign fund inflows into primary debt issuances and corporates, dealers said. 

Dealers said some of the inflows were likely for National Housing Bank and Indian Railway Finance Corp's issuance of bonds worth a total of up to 45 bln rupees. Bidding for both the bonds took place today. 

"Today, it was mainly FX inflows in the market, there were (dollar) inflows into corporates, due to which USDINR moved to 82.65 levels," said a dealer with a foreign bank. "There was buying (dollar) at the 82.70 levels, but today it was mainly FX inflows."
 

However, dealers said that banks bought the greenback for oil marketing companies and importers on dips in the dollar/rupee levels which limited gains for the Indian unit. 

A fall in the domestic share indices also limited gains for the Indian unit. Both the Nifty 50 and the Sensex closed 0.3% lower today. 

Meanwhile, Reserve Bank of India Governor Shaktikanta Das said today at an annual session of the Confederation of Indian Industry that India will attract foreign investment inflows if investors are provided with microeconomic, financial, and exchange rate stability. 

Das also said that economic growth is possibly higher than 7% in financial year 2022-23 (Apr-Mar). "Das gave a very robust, confident view on the economy and growth, this could have momentarily contributed to a strong rupee today," said a dealer with a foreign bank.

FORWARDS

The premium on the one-year dollar/rupee forward contract came ended higher as banks and importers bought dollars for forward delivery noting gains in the rupee and due to relatively low levels, dealers said.

The premium on the one-year dollar/rupee forward contract also rose tracking a fall in US Treasury yields, dealers said.

The yields on the benchmark 10-year-US Treasury note fell slightly on Tuesday as US debt ceiling negotiations remained unresolved after another round of talks, which weighed on investors' sentiment. 

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 172.00 paise, against 169.28 paise on Tuesday. On an annualised basis, the premium was at 2.06%, against the previous close of 2.02%.

OUTLOOK

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

Traders await the minutes of the Federal Open Market Committee's May policy meeting due later today for cues about the US central bank's monetary policy going forward. 

"Rupee is expected to remain in the broad range of 82.50-83.00 as markets await the debt ceiling issue resolution. With RBI selling at 82.85 and giving assurances of rupee's stability, exporters can continue to sell near to RBI zone of above 82.80," said Anil Kumar Bhansali, Head of Treasury, Finrex Treasury Advisors LLP.

Dealers pegged the immediate key technical resistance for the rupee at 82.60 a dollar. During the day, the rupee is seen in the range of 82.50-83.00 a dollar.

India Rupee - World FX:Sterling up on higher-than-expected UK Apr CPI

MUMBAI – The pound sterling rose 0.1% against the dollar as the Office for National Statistics reported that the headline UK Consumer Price Index rose 8.7% on year in April against the expectation of 8.2% from a Reuters poll of economists.

The New Zealand dollar slumped 1.8% against the dollar as the Reserve Bank of New Zealand signalled it was done with its most aggressive hiking cycle since 1999. The central bank raised its official cash rate by 25 basis points earlier today, to 5.5% - the highest level since the 2008 financial crisis. 

In the monetary policy statement, the Reserve Bank of New Zealand forecasts the official cash rate to peak at its current level.

The dollar index neared a two-month high on safe-haven demand as investors' risk sentiment took a hit due to lack of progress in the US debt ceiling negotiations. At 1503 IST, the dollar index, which measures the strength in the greenback against a basket of six major currencies, was at 103.55, as against 103.48 on Tuesday. It was at 103.20 on Monday.

Investors now await the minutes of the Federal Open Market Committee's May meeting, due later today, for fresh cues on the Federal Reserve's rate-hike path. (Kabir Sharma)

India Rupee: Slightly up as banks sell dlr for FX inflows, exporters

India Rupee: Slightly up as banks sell dlr for FX inflows, exporters

MUMBAI – The rupee rose slightly against the dollar today as banks sold dollars for forex inflows and exporters, dealers said. 

"There were FII inflows, due to which USDINR rose, but there is also buying pressure in the market," said a dealer with a big state-owned bank. "Oilers are buying." 

Dealers said that forex inflows are likely related to National Housing Bank and Indian Railway Finance Corp's issual of bonds worth a total of up to 45 bln rupees. Bidding for both the bonds took place today. 
 

However, dealers said that banks bought dollars for oil marketing companies and importers at dip in the dollar/rupee levels, which limited gains for the Indian currency. 

Meanwhile, Reserve Bank of India Governor Shaktikanta Das said at the annual session of the Confederation of Indian Industry that the monetary policy decision was not in his hands, as it was driven by what was happening on the ground.

"They will decide with statistical economic data and will also see what the Federal Reserve is going to do," said a dealer with a private bank, when asked about Das's comments on the monetary policy decisions. "From my point of view, I think if the Fed hikes the rate, then we should also," he said.

Dealers pegged the immediate technical resistance for the rupee at 82.70 a dollar. During the day, the unit is seen at 82.60-83.00 a dollar. (Aiswarya Santhosh)

India Rupee - Asia FX: Most units dn as dlr firm on safe-haven demand

MUMBAI – Most Asian currencies fell against the dollar as the dollar index remained firm due to safe-haven demand. Investors are worried about a potential US default after the latest meeting between US President Joe Biden and Congressional leaders on the US debt ceiling ended with no agreement. 

Moreover, data on Tuesday showed sales of single-family homes in the US rose to a 13-month high last month. The headline S&P Global Flash US PMI Composite Output Index rose to 54.5 in May from 53.4 in April, indicating fast growth in the private sector business activity. 

Market participants now await minutes of the US Federal Open Market Committee's meeting held on May 2-3, due later today, for cues on the Federal Reserve's future monetary policy decisions. 

At 1103 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 103.44, as against 103.48 on Tuesday. It was at 103.20 on Monday. 

The Philippines peso was flat against the dollar after the country's central bank kept interest rates unchanged last week and indicated a pause in rates at the next two to three meetings. 

The Taiwan dollar fell 0.2% against the greenback, and the South Korean won was down 0.3% against the dollar. (Aiswarya Santhosh)

India Rupee: Largely steady as banks' dlr sales offset firm dollar

MUMBAI – The rupee was largely steady against the greenback today as banks' dollar sales, likely for exporters, offset a firm dollar index, dealers said. 

"There is some (dollar) selling, due to which USD-INR fell slightly," a dealer with a private bank said. "The range seen today is 82.75-82.85." 

The dollar index remained firm, at near a two-month high, as market participants await the Federal Open Market Committee's May meeting minutes, due later today. 

The index also gained on safe-haven demand as market participants fear a potential US default due to lack of progress in debt ceiling negotiations even as the Jun 1 deadline looms nearer. 

At 0936 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 103.45, as against 103.48 on Tuesday. It was at 103.20 on Monday. 

Moreover, a fall in domestic share indices also weighed on the Indian unit. At 0938 IST, both the Nifty 50 and Sensex fell by 0.1%. 

Dealers said the Reserve Bank of India may sell the greenback to prevent the rupee from falling beyond the psychologically-crucial level of 83.00 a dollar. They pegged the immediate technical resistance for the rupee at 82.70 a dollar. During the day, the unit is seen at 82.60-83.00 a dollar. (Aiswarya Santhosh)

India Rupee: Expected range for rupee - May 24

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

End

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

Edited by Maheswaran Parameswaran

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